Friday, 24 May 2019

Financial study

The Central Staff Committee has just published a document titled "The Financial Study: Yet another hoax". Here is the summary

 

Dear colleagues,

In the EPO, financial studies tend to be a prelude to cuts in staff benefits. The latest study is no exception. The present publication explains one of the tricks used to make the Office look poor. More publications will follow.

The recently published financial study (CA/46/19) by Mercer and Oliver Wyman seems to indicate that more bad news is to come.


The studies' conclusions ...

The key message of the financial study (p 34) is:

"The EPO faces a structural operational gap, with costs increasing faster than revenues, leading in the future to significantly decreasing cash flows.

The EPO has greater control of cost levers than revenue levers which presents an opportunity to better meet its future obligations through careful cost management."

In other words: the Office must be reducing costs - staff costs.


... and how they came about

The EPO's main income is from fees. The Financial Study includes this 4% fee increase for 2020 but assumes that there will be no further fee increases from then on till 2038. On the other hand Staff salaries and pensions follow the normal increase. For any organisation - as rich as it may be - such an approach will lead in the end to budgetary gaps. According to our first calculations the alleged gaps could be offset by merely continuing the biennial 5% fee adjustments in place.


Märpel is no accountant but checked the study and it seems that the Central Staff Committee is indeed right and that the document was drafted on unreasonable assumptions chosen to make the financial situation appear catastrophic. In contrast, the proven historical records show that the EPO has a yearly surplus of over 350 millions Euros.


It seems that President Campinos has decided to prepare for a new conflict. What other reasons could there be to publish such a blatant lie? A staff strike is planned for the next meeting of the Council.







Friday, 17 May 2019

A picture is worth 1000 words

A single picture from the survey summarizes the present situation at the EPO. In red, people are unhappy about the situation, in green people find the situation to their advantage. G13 is the highest grade an examiner can have, the people in G14, G15 and G16 are managers. They are also the people whose remuneration was considerably increased under Battistelli leadership.



Wednesday, 15 May 2019

Survey

The Office wide survey "your voice, our future" was just reviewed by the central staff committee, this is the text of their article.


The results of the Office wide staff survey "Your voice, our future" are out and they are nothing short of a disaster. We share the analysis in the article published on KluwerPatent blog: many expected the results to be bad, but few expected them to be so abysmal. The EPO scores far below the expected level of an international organisation.


Introduction

Earlier this year, Mr Campinos conducted the first Office-wide staff survey since 2016. Following the extremely negative feedback his predecessor, Mr Battistelli, had received on his leadership in a 2011 survey, EPO staff were only surveyed once more during his presidency, and then only within the context of his "2016 Social Study". However, just three years later and with a new President, staff were apparently eager to be heard: the participation rate was at a record-breaking 85% (2011: 72%). Nevertheless, the results of the present survey remain a great concern. Moreover, the same problems that have plagued the Office for many years are still very evident and unresolved.

We encourage all colleagues to review the results for themselves and draw their own conclusions. This paper simply presents and comments upon what we consider to be the main findings from an analysis of the results.


43 shades of red

Willis Towers Watson (WTW) goes to great lengths to make sure there is at least some green to be seen on every slide, but the predominant colour is red. In the slides comparing responses between different DG's or between Job Groups, it might appear that only DG1 & Job Group 4 (read: examiners) score red. But that's not the case: all DG's, all Job Groups score often well below any external benchmark on almost all categories, as acknowledged by the consultants during their presentation.

Also, WTW aggregated the 'agree' and 'tend to agree' into one green block, and the 'tend to disagree' and 'disagree' into one red block for the presentation of the results. When asked "Why?" by the Staff Representation during their presentation, WTW claimed that splitting the graphs would have complicated the overview. We disagree. A simple shade between solid and light green, solid and light red would have done the trick. WTW admitted that the information was available (how could it not be?). However, as far as we know, it will not be shared with staff, but visible just to management. So much for transparency...


The overall picture

The most strikingly negative results are those that relate to senior management. Only 16% of staff has confidence in the decisions made by senior management. That score is 56 points below the "Europe norm" benchmark. Low scores for senior management have been a consistent feature of EPO staff surveys since records began. In our opinion, the present survey's questions were not really designed to reveal the underlying causes. Maybe significantly, there were no questions directly addressing the quality of the EPO's "products" to the outside world. Nevertheless, the participants in the Boards of Appeal (BoA) Unit judged the quality of the "services" provided (to them) by their colleagues in the Office, i.e. DG1, as 37 points below norm. The consultants could do little else than identify the quality of the EPO's "services" as a cause for concern, noting "the Office scored 43 points below norm on "commitment to quality is apparent in what we do on a day- to-day basis".

Relying on questions about how well senior management communicates and whether they provide a clear sense of direction, the only reaction of management to poor results has always been "we need to communicate better". Coming today to exactly the same conclusion without even trying to tackle the root causes just adds insult to injury. Staff appear to understand where management is trying to go (Basically: higher productivity, lower quality, less pay for staff and more pay for the top brass), they just don't agree on either the final destination or the route to be taken. Some 68% strongly believe in the mission of the Office, but most are unconvinced about where senior management is taking it. More significantly, only 20% consider that "the Office" is effective at identifying the changes that are necessary to ensure our long-term success.

The low score on "effort made to get the opinions of staff" must be particularly frustrating for Mr Campinos, who has personally spent quite a lot of time engaging with staff in individual meetings. This communication exercise has apparently not convinced staff that it might influence his decision making.

The consultants (Willis Tower Watson) summarise the results as follows: "Views on remuneration and well-being are positive compared to external benchmarks. Results are below external benchmarks on all other categories." However, these derived results from the survey responses particularly for remuneration and well-being are questionable. For example, no clear questions on career prospects or general health have been asked.


For both remuneration and well-being we want to add some further caveats.


Remuneration

The more detailed results show that our recent recruits (staff with less than 5 years experience in the Office – see e.g. page 35 of the annex to the overall results presentation) are significantly less satisfied with their pay than their older colleagues. This should be a warning for management because these new recruits are the staff who have only experience of the new career system and yet they will have to remain engaged to carry the Office through in the future. We think that the EPO would also be well advised to try and identify the reasons why some 30% of staff think they are not paid fairly compared to others working in the Office, and why 35% think their personal performance on the job is not rewarded fairly.


Well-being and lack of respect

Concerning the relatively favourable scores for well-being, these seem mainly driven by work- schedule flexibility and the positive answers to questions such as: "My immediate manager cares about my well-being" and "People in my unit care about each other's well-being". But other questions that apparently do not enter into the well-being score - but are clearly related to staff well-being - show a very different picture: 63% of the respondents consider that insufficient effort is made to get the opinions of staff and 58% do not feel free to speak their mind. Even more worryingly, only 20% state that they do feel free to speak up. Nearly half (49%) responded negatively to the statement that "all staff are treated with respect here" and 44% of staff feel that they lack any opportunity for personal development. This is not a picture of staff feeling well in their work environment.

It is also striking that not a single question in the survey was directed at the perceived health of staff, yet the number of stress related diseases and burn-outs has increased by 25% between 2017 and 2018 and sick leave in DG1 (some 77% of staff) increased by 20% over the same period. In our view this should have prompted management and the consultants to enquire more about staff health.

In view of the above, not only is the internal benchmarking with respect to well-being inadequate, but also a meaningful comparison with an external genuine benchmark on well-being appears entirely questionable.


What next?

Mr Campinos comments on the survey results in a communiqué to staff entitled "Your voice, our future results". The addition to the survey title of the word "results" is small but significant in that it indicates to us what really matters to our President. Further indications can be found in the text that follows: "the responsibility to rectify any shortcomings falls to us all and everyone will now play their part in improving staff engagement – on the basis of shared responsibility. As one organization, we will take shared ownership of this report, assess the findings with our colleagues and work together to collectively address the issues that have been identified." This sounds very much like "you will solve my problems". Pushing responsibility for the bad survey results back to staff is unlikely to build greater confidence in senior management, the number one focus area for attention identified by the consultants.

We can only hope that Mr Campinos will realize that good "results" can only be achieved by a motivated staff and that he will find better ways to motivate staff.


Our provisional conclusion

Anyone going through the 2011 WTW survey, or browsing through the 2016 PWC Social Study, the 2016 Technologia Staff Survey, and the recent IT Audit will see that today's survey results are neither a surprise nor a statistical anomaly. Instead, they are a dangerous continuation of a long- standing trend, that of a sinking ship. We are concerned that the apparent reaction of the President in his communiqué "Your voice, our future results" is not proportionate to the seriousness of the situation. Simply rearranging the chairs on the deck of the Titanic won't do.

The survey "Your voice, our future" is also, in our opinion, incomplete. For instance, there are no questions asked that allow to assess the current level of psychosocial risk in the Office, yet this has been raised as a concern in previous surveys. This calls for a remedy: the 4th edition of the 3- yearly Technologia Staff Survey (already ran in 2010, 2013, 2016) should normally be launched after the summer break.

In the meantime, those senior managers whose policies have led to the disastrous results of the survey, and in particular those who have simply stood by and watched it happen, are invited to reflect on their position and consider stepping down.


The Central Staff Committee


Saturday, 11 May 2019

Zero-sum game

Exactly one year ago, Märpel warned you that President Battistelli has decided he needed a blank check to play with the EPO cash reserves (2.3 BILLIONS Euros) on the stock and derivatives market. Here is the article:

http://rip-kat.blogspot.com/2018/05/nothing-can-be-said-to-be-certain.html

The resulting fund is called "EPO Treasury Investment Fund" or EPOTIF.


A few days ago, the financial status report was published. Within that report, the following gem was found:

In 2018 the Office transferred its legacy bonds portfolio to the EPO Treasury Investment Fund (EPOTIF) which holds the funds in line with the Strategic Asset Allocation approved by the BFC. As at the end of 2018 the total value of EPOTIF units was € 2 460m, which includes a revaluation loss for the year of € 97m.


Just after two days that sentence was redacted, it now reads:

In 2018 the Office transferred its legacy bonds portfolio to the EPO Treasury Investment Fund (EPOTIF) which holds the funds in line with the Strategic Asset Allocation approved by the BFC. As at the end of 2018 the total value of EPOTIF units was € 2 460m.


Märpel is confident that the readers will spot the difference. Hint: it involves 97 millions Euros.


That amount of money was lost between mai and December 2018. Or, more precisely, it was lost for the EPO. Short term speculation is usually a zero-sum game: when somebody loses, somebody else wins. Why do you think that President Battistelli absolutely had to get EPOTIF approved just one month before he left the Office?


Thursday, 9 May 2019

Survey - 2

In the previous article, Märpel presented the results of the staff survey. One of the concerns of the staff is that with production increases, quality has decreased.

Apparently, our internal quality control (DQA) also noticed. Compliance decreased from 85% to 75% last year. Märpel is not so good at maths, but understands that a quarter of the searches and granted patents do not respect the EPC. Märpel is also not so sure, but believes that this figure puts the EPO behind all other major patent offices.

Management also noticed. They had to.

Common sense would have that management would lower production pressure, maybe set time aside for retraining, etc… This is pretty standard. But not, Stephen Rowan, Vice-President DG1 had a better idea: Collaborative Quality Improvements (CQI). In his own words:

Examiners in the pilot have been asked to initiate consultations within the Division for at least the following:

- One search report and written opinion per examiner per month

- One communication per examiner per month

- All files where the first examiner would envisage to summon to oral proceedings

- All final actions (both grants and refusals).

For each consultation, the first examiner fills out a logbook for recording the most relevant information such as

- stage of the procedure

- duration of the consultation

- topics discussed

- role of the colleague(s) consulted (e.g. chairperson, formality officers)

- insights gained

The first examiner also indicates which improvements were identified and to what extent the consultation was considered useful, as well as if it is likely that the consultation would have taken place if they were not involved in the pilot. For future training planning and other Quality Initiatives, every time a quality improvement is identified the type of improvement is indicated in a detailed list of improvements provided in a catalogue.

All team managers of the pilot organize regular team meetings dedicated to quality only. Outcomes of the meeting are recorded in a separate logbook.

In summary, Examiners are supposed to spend more time discussing the files together. They are also supposed to write everything down in a logbook.

There is nothing really wrong with that, except that it is not really related to compliance with the EPC and that the whole exercise costs time. But what time budget do the examiners get? Exactly zero. What was Vice-President Stephen Rowan thinking?