Is short-termism a problem? From Premiership football managers with an average tenure under 18 months to ongoing concerns about investors focusing on short-term shareholder value, what can HR do to lengthen business horizons?

Yes short-termism in football is rife. Are there lessons that translate from the dressing room to the boardroom? Curious decisions such as the sacking of Chris Hughton from Newcastle when his performance was good and the decision to retain a stricken Avram Grant at West Ham, when his was comically woeful, show that other factors come into play.  With Hughton his removal was probably based upon the fact the he wasn’t seen as  big enough for the job of Newcastle manager. Hughton wasn’t exactly a charisma bucket it has to be said. Grant had little pizzazz either but his presence took flak away from the owners Gold and Sullivan.  The charisma factor can be important in board decisions about CEO’s yet savvy HR seniors should know how to challenge these beliefs with evidence based management. Quiet “authentic” types trump ego driven ones as Jim Collins demonstrates. Some insight from football courtesy of economist Stefan Szymanski that changing horses doesn’t always get you to the other side of the river. In football newly appointed managers often waste money by buying players that are already at their peak and usually add significantly to the wage bill. As Boris Groysberg of Harvard has shown “Chasing Stars", who looked stellar in their previous environments (often the reason for axing and underperforming CEO) generally fails to deliver.      

Yes, short-termism is an issue, especially as we wade out of the near financial melt-down of recent years resulting from short-term decisions.  While hindsight makes the ‘cause and effect’ linkage clearer, many need convincing that lessons have been learnt. It’s also questionable whether the new requirements on financial institutions will genuinely reduce risks going forward in that sector.  The good news is that the ‘fall out’ of short-termism just reinforces the imperative for HR to actively contribute to business strategy decisions and horizons if it’s not already in place. There are tangible must-do areas such as recruitment and retention where the brand damaging ‘hire and fire’ approach needs to be addressed.  HR also needs to play central role to play in leadership and the other factors which contribute to employee engagement. By focussing on the majority ‘engine room’ staff that impact customer satisfaction and productivity directly contributes to bottom line profits. With most FTSE100 company shareholder value comprised of intangible assets, HR’s expertise needs to directly contribute to business strategy in the ‘new’ world. While I may be biased, some of the successful HR leaders ensure that reward practices and the values underpinning them drive the right employee behaviours and outcomes to achieve more sustainable business horizons.      

We are all in pursuit of being more agile in the way our businesses operate, but culturally I think it is about recognising that there is also a place for continuity and the development of wisdom in organisations and HR can influence that.  Longevity has come to be seen as something of a dirty word in recent years, but short-termism carries a cost too.      

We all take comfort from those who we believe are ` in it for the long run `.We don`t generally like fly by nights or those in it for a quick buck. However some practices don`t seem to support that. Do bonus schemes incentivise the long run or the short term? Do they drive an emphasis on the here and now rather than a strategy that might not deliver gratification for a while? Do we therefore value the action people more than the thinkers? Of course things need to get done and the world can pass you by whilst you are having a think but on the other hand rushing ahead without planning the next move or thinking too hard about the consequences isn’t necessarily wise either. In the public sector political terms of office dictate decision making, governments have about 3 or 4 years to make their mark because time is lost starting up and then preparing for an election later on. They tend not to be remembered for long term strategy so the short term can look attractive not withstanding that some initiatives have long lead in periods. Balance has to be the right way forward but that will depend on what your organisation values!