Will the computer win?

My first restructuring was while I was still at school and my father bought out the shareholders of Woodley Wines Ltd and turned it into a private company. My second was with Price Waterhouse during internship in Sydney with a takeover of Continental Distillers by Seagrams in the USA. I got that job since the manager had asked “Anyone here know about anything about booze?” Later under the philosophy of Professor Chambers of Sydney University current price accounting fame, I worked with a team revaluing companies against book value which always showed a major difference on which takeover offers were based. I also worked to my regret for Lang Hancock and declined to work for Alan Bond.

Now having worked restructurings around the world with a special focus on State Owned Enterprises, the biggest problem every time is that whenever a need to restructure becomes apparent, it usually is accompanied by over staffing. True, but too often the fixers called in to handle the restructure simply believe that to reduce costs you just remove staff and all problems will all go away. You wish.

These reflections are brought about after talking to a guy Mike yesterday, who after five years with his company had just been retrenched. Not unusual but he had worked for a large recruiting firm and found he had been replaced by a machine. He explained that firstly when they won a job from a client, qualifications and a skills list were programmed into the computer. When applications came in, these also went through the computer which would select five matches or to make your job easier, be cut back to three. The final three would be reviewed by the recruiter in hard copy and submitted electronically for consideration to the client who was told that an intensive selection process had taken place from say, 350 applications. Except it was not true and as he put it, the whole business was about winning clients, not providing in depth recruitment advice. So his problem had been finding people and now he had to find a job. One can only question if this procedure by machine gets the best people. Having recruited one guy in Africa for FAO to teach farmers how best go to the field to plant maize, he arrived with only one leg. When asked how that was meant to work, his reply was “Well the application form did not ask how many legs I had”.

When restructuring nuts and bolts this does not involve emotions. With people it does and this becomes their problem but also yours if you oversee the process. These people pushed out all have families, commitments and had an expectation to remain employed. Some simply go with the flow and others fight back which is uncomfortable for everyone.

Restructuring the largest Parastatal (State Owned Corporation) in Kenya, we put off 3,000 while keeping them all employed, something achieved with intensive retraining and providing seed money. Or as we achieved under the EU in China, by letting garment workers keep their sewing machine and work from home paid on a piece by piece basis, something which suited them better earning more money while being able to look after their children.

But as my poor friend Mike has found, even when you are on the end dishing out life and death recruitement decisions, it can still come back to bite you and in the end perhaps that computer will be able to replace us all. Mike now says he will stay away from direct employment with the big boys and start his own company on the skills and contacts he acquired. But will he be able to stay ahead of the computer?