Governance – Diverse Boards Matter

WEN event at Fidelity

As secretary to WEN Ulrike opened a panel discussion about the role of diversity on boards in business. Speakers included Justine Lutterodt of the Centre for Synchronous Leadership  and Sabine Demkowski of Better Boards. The event was hosted at Fidelity.

The main message is that there has to be diversity in thinking within boards and in how board members approach problems, not just an external diversity.

Boards have to be open to listening to diverging views, be willing to be challenged and accept that mistakes happen and that they can be a good thing.

Evaluation – A Great Learning Opportunity

restoration
Ongoing restoration work on a baroque ceiling in Osterwieck, Germany, photo: UH

Ulrike gave the introductory keynote speech on 21st February to the 2018 BRICK conference. BRICK is an innovative education programme designed by The Prince’s Regeneration Trust to build skills, provide expertise and improve connections. It is aimed primarily at community groups looking to start or progress a heritage regeneration project. (For more information see http://www.brick-work.org)

This year’s conference focussed on learning and evaluation. Laura Norris, the Programme Director of BRICK, contacted Ulrike in her role as Vice President of the UK Evaluation Society to find a keynote speaker for the conference.

The 150 conference participants were experts in the restoration of heritage buildings and programme management but not evaluation.

Ulrike’s main points were:

  • Evaluation is essential for learning. Those who do not evaluate are unlikely to improve.
  • Finding mistakes or areas for improvement is a good thing because it enables learning.
  • While evaluation is a discipline with a large body of literature it can be done in accessible ways, helping organisations to achieve better outcomes and improve their processes.
  • UKES is a learned society bringing together evaluation experts from all sectors and can be a useful source of expertise for those commissioning evaluations.

The lump of labour fallacy – again revisited

One of the topics in the news recently has been immigration. Net immigration figures appear to have fallen, fewer students than first thought are staying after completion of their degree and some non-British EU citizens are going back to the continent. Debates on all media repeatedly use the argument that surely this must lead to higher wages for British workers as the demand for labour meets a reduced supply. However, this ignores some of the dynamics in the economy – and is known as the “lump of labour fallacy”.

The argument is that the reduction in immigration would lead to a decrease in supply of labour and thereby an increase in wages. While this might be true in some selected professions for a short time, this argument does not consider the fact that productivity, i.e. how much a worker produces in a given amount of time, depends on the worker’s skills and the equipment they are working with, whether the goods they produce are in demand and at what price they become unaffordable. Productivity is ultimately what drives how much an employer can pay their employees. The argument also ignores the fact that more people demand more things, drink more beer in pubs, buy more food, require more repairs of more cars, etc, etc – and fewer people are doing less of this.

The lump of labour fallacy occurs because it is difficult to imagine that the world changes dynamically. The numbers of jobs will be different once the migrants are gone. Or the other way round: The number of jobs will go up when new migrants arrive. In addition to the simple increase in demand caused by the needs of immigrants, they may also have skills not in sufficient supply in the country they move to. With additional skills immigrants may unlock jobs for domestic workers. They could be on the more advanced end of technology: An immigrant innovator who suddenly needs a number of designers, manufacturing workers, etc, or just the arrival of a master mechanic in a small town or large village setting up a garage, enabling local workers who were not able to invest or find work.

However, as always things are more complicated. There may be areas, villages, or small towns where these dynamics do not work. Where low and medium skilled workers are replaced by cheaper immigrants, where the young immigrants and their children require school places, GP time and housing which are not easily made available. And this does not address questions of changes in local culture, which some people may find offensive or irritating.

It is important that decision makers at a national level have both these effects in mind when they make decisions. The overall additional resources provided by migrants, the additional jobs created by their very presence – in an ageing society which needs young workers to care for older people, to pay taxes to fund the NHS, etc – but also those people who are not able to benefit from this overall opportunity.

Photo: A construction worker working on a 18th century cottage, Ulrike Hotopp

Higher wages and lower prices – squeezing the juice out of the British apple?

Apples small

I always think looking at very particular markets, which are relevant to all of us, helps us gain some insight into economic questions. Here’s an example: The apple.

The apple plays an important role in British science, culture and kitchens. They are an affordable source of vitamins, particularly during the times of the year when other fruits are scarce. But only a third of the apples eaten in this country are grown here, despite the fact that the climate is ideal for a large variety of eating apples – and of course, not all apples are grown to be eaten fresh. They are also an important input into cider and a number of other processed foods from apple crumple to apple sauce.

The UK imports a significant share of the eating apples and it exports a lot of apples as well, including the cooking apple, Bramley. In addition to its production and trading pattern picking apples to eat fresh is still a very labour intensive industry. Apples should not get bruised when picked. Seasonal, manual labour is therefore very important to the industry. This means that although the apple growing industry in the UK is small compared to GDP and small compared to the whole agricultural industry, it reflects in itself a lot of issues which arise when considering Brexit.

The Financial Times used the example of a commercial apple grower in the UK to highlight the challenges this particular sector is facing and will increasingly face in a post 2016 UK (FT, 29 December 2016). The farm described in the article grows apples to eat rather than for cider, juice or any other processed foods. Consumer expectations and therefore supermarket standards are high in this sector. Bruised apples cannot be sold. This means picking apples by hand with care to avoid bruises is necessary.

To my surprise, I learnt that the eating apple market is a very dynamic market, tastes change and new varieties appear. The fact that only a third of the apples eaten in this country are actually grown here means that there is effective UK production with a high demand however production has fallen over the last 15 years or so. Why this is the case could the topic for another blog, but the pressures put on the domestic industry in the form of higher wages, potentially a less accessible seasonal workforce and uncertainties around investment into new orchards and processing plants are the same pressures that exist for many other industries as well.

Post-Brexit policies will have a direct impact on the structure of the sector, the price of apples across the whole year and the whole country, the inputs used in producing them and the local communities within which they are produced.

While this might appear like a parochial, very local example, it is these kinds of markets and basic food products within which the final results of the UK’s policies following Brexit will play out. Producers like the farm discussed in the FT’s article will not just be affected by trade deals but also by migration policies, labour standards, including the minimum wage, food safety and many other policies. And on the other hand these effects on the apple growing industry will have impacts on the amount of vitamins eaten across the UK, the health of the nation, especially those consumers who see the apple as a cheap, nutritious food.

For more information about UK apple production see:

English Apples and Pears http://www.englishapplesandpears.co.uk/apples_production_tonnes_uk.php

DEFRA Basic horticultural statistics 2014

Evaluation – showing the benefits of community engagement

I recently conducted a short evaluation for a project which started 20 years ago.

In 1995, the nurse Hazel Stuteley came across a small run down estate in Cornwall. Public agencies had almost given up on this place, the police saw it as a no-go area, children were expected to fail at school, unemployment was high. Hazel mobilised the community and forged cooperation, using existing resources to improve people’s lives. Years later, in November 2015 she decided to have this project evaluated to demonstrate the impact of her and the community’s effort.

Helping people to improve their lives was at the forefront of Hazel’s mind, not collecting data. But with the help of a newspaper article, some existing data points, and the rest of the country as the counterfactual I was able to construct sufficient evidence which after a 70% optimism bias had been applied still showed a significant net benefit of her and the resident’s work.

My methods consisted of starting with the data available: rates of post-natal depression, childhood asthma, low school performance, high crime rates, bad housing stock and unemployment – the situation before the intervention. Looking at the estate again after the intervention as and when data had become available and comparing this to the changes across the country using a difference in difference approach. Some of the data relied on the memory of the protagonists. To ensure that there was no positive bias in the results, I applied a 70% “optimism bias”. Despite this big reduction, the results still showed that the Beacon Estate had improved compared to the rest of the country, improving the lives and chances of the people who live on it.

Hazel is now using this report to support and encourage others who face similar situations to show that it is possible for people to change their lives. “Even an economist said so!”

Ulrike Hotopp, Director LIVE Economics ltd, Chief Economist at Simetrica at the time of this evaluation

Natural Capital – silver, copper and lead for over 1000 years

People have used the natural capital provided by the Rammelsberg in the Harz mountains of northern Germany for over 1000 years mining for silver, copper and lead. Mining stopped in 1988. As humans are no longer mining for metal, another form of natural capital is used in this historic area: cultural capital. The site is a world heritage site and visitors come to learn about this historic site.

We provide economic analysis of natural capital to support decision making for now and into the future.

BRICK Conference

Keynote speech at the BRICK Conference on 21 February:

Ulrike gave the opening key note speech to the 2018 BRICK conference. BRICK is an innovative education programme designed by The Prince’s Regeneration Trust to build skills, provide expertise and improve connections. It is aimed primarily at community groups looking to start or progress a heritage regeneration project. (For more information see http://www.brick-work.org)

Evaluation – A Great Learning Opportunity

  • Evaluation is essential for learning. Those who do not evaluate are unlikely to get better.
  • Finding mistakes or areas for improvement is a good thing because it enables learning.
  • While evaluation is a discipline with a large body of literature it can be done in accessible ways, helping organisations to achieve better outcomes and improve their processes.

UKES is a learned society bringing together evaluation experts from all sectors and can be a useful source of expertise for those commissioning evaluations.