The news that Raj Rajarathnam, head of hedge fund Galleon, has been arrested for insider trading opens up all sorts of interesting issues. The use of wire taps to track white collar crime is reminiscent of tracking down mobsters, the Sri Lankan government’s claims that he had ties to Tamil separatists and Mr Rajarathnam’s motivation - in the book New Investment Superstars, he said: “After awhile, money is not the motivation. I want to win every time. Taking calculated risks gets my adrenaline pumping.” - and his prominent position in the philanthropic organisations in New York, and so on.

What struck me, is that he planned to be in the office this morning to explain this all to staff. Managers face all sorts of communication challenges and this surely has to be among the toughest, a delicate balance of trying to maintain a level of credibility as the company leader but also, presumably, trying to make sure the people in the business keep the business going, all against the background of a handcuffed Mr Rajaratnam being escorted by FBI agents on the front page of most major newspapers.

UPDATE: Ok, so I guess you simply protest your innocence.

In today’s paper, check out our latest ranking of executive MBAS. As you will see, the trend for success seems to be those programmes that are taught in multiple locations. In the age of globalisation, that has to make sense.

The Royal Mail and its unions are at loggerheads. Again.

I moved to the UK in 1997 and like a letter that never reaches its final destination, turmoil in the organisation is one of the business stories that has been a constant throughout the time I have lived in the country.

Every year, it seems to have lurched from crisis to crisis: successive bosses have said that the service needs to modernise or die; unions and workers battle them back in negotiations, claiming that ‘modernisation’ is a code word for gutting the organisation, cutting jobs and reducing salaries to disastrous levels; and the government, publicly at least, seems keen to stay out of it as much as they can (though I have to say, Lord Mandelson’s statement on the decision by the CWU to strike - “Candidly, I think it is suicidal” - did strike me as extraordinarily strident).

Continue reading "The Royal Mail - the saga that never dies"

• Cabinet to slims down for Sarkozy - Lucy Kellaway wrote about the balance between private health and employers earlier this week, but I’m not sure how many managers can get away with this. I especially liked his apparent suggestions he “told at least one would-be appointee to drop some weight and change his hair style if he wanted the job”
• Google paid a $1bn premium for YouTube - an interesting admission from Eric Schmidt, CEO of Google, that the company paid $1bn more for YouTube than it was worth simply to make sure no one else could outbid it (Hat tip: The Browser)
• Success stories in bad times - Ok, so the headline writer employed a bit of hyperbole (do Twinkies qualify as a success?) and it’s a bit US focused but chocolate chip cookies are certainly a silver lining to any recession

I just spoke to a book publisher who gave an interesting insight into how the downturn is affecting their business. Because so many major book chains have made people redundant or laid them off, this pubilsher was having to factor in at least two extra weeks into their distribution schedules to getting titles on to shelves. There are all sorts of implications as a result of this - stock has to stay in the warehouse longer, it takes more time to start making money from them and so on.

A number of major US companies have quit the US Chamber of commerce in a rift over its opposition to climate change legislation which would place a cap on carbon emissions.

The rift started when some big energy groups, including Pacific Gas and Electric of San Francisco and Exelon, the biggest operator of nuclear power plants in the US, have pulled out because “it was committed to legislation to cap greenhouse gas emissions”. And Nike withdrew from the board of the Chamber, although it will remain a member.

Today, Apple announced it was withdrawing too.

• A husband and wife switch jobs for two weeks - Huband takes become the stay-at-home parent, wife takes over his job as an editor of Slate, the online magazine. Not exactly the craziest switch in the world; Susan Burton is a former editor at Harper’s Magazine (declaration: I was an intern at the magazine at the time when Susan was an editor there) but still could prove an intriguing experiment. At the very least, it should be a good read.
• David Hockney’s iPhone passion - If I was Apple, I’m not sure I could have come up with a better advertisement of just how useful the iPhone is for some people. This has to take the mobile phone as utility to a new level. The piece includes examples of work he’s created on the phone
• The price of being gay - The authors admit that this isn’t an exact science but…
• Parental benefits for the self-employed - I’m Canadian and a parent and I know lots of people who might break out and do their own thing if not for the need to keep their benefits, including maternity or paterntiy pay. Does this hold back business and entrepreneurship?
• France Telecom makes changes at the top in wake of scandal of suicides - a story that still has yet to be resolved. Here’s the FT’s take, the story in Les Echos, Liberation and Le Figaro

Great analysis in today’s paper on how the Indian government is establishing commodity exchanges in rural towns to enable farmers to bypass the middlemen who have traditionally controlled the route from farm to market.

In August, we looked specifically at the role of middlemen in the mango market, with an article and a slideshow. In that case, big retailers, including Walmart, were trying to deal directly with farmers both to cut their own costs and, they say, to help farmers become more efficient with advice from agricultural experts (and, of course, to increase their profits).

Traditional forms of business are a real burden on economic development in India and are also complicated to dismantle. These functions have existed for centuries and the deeply embedded role of caste - middlemen often pressure farmers to sell to them on the basis of shared caste - make it hard to break out of this cycle, particularly in less well-educated rural areas.

An Indian sociologist who has studied and written extensively about caste - and also had a role advising a professional services firm in India - once told me that the best hope for breaking down the caste system and, thereby encouraging social and economic development, was urbanisation. The rural and agricultural economy is hugely influenced by caste because profession and social class are inextricably linked. In cities, the professor said, these ties are broken.

Business and social change can sometimes be a good thing.