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We need to talk about British management

Mon, 5th Mar 2018

I was in the middle of writing about something completely different when I read a piece in the FT lamenting the UK’s mediocre management record. At the same time financial journalist Ian Fraser, a tireless critic of the UK banks, particularly RBS, and their auditors, sent me an incredulous tweet – ‘Sir Win Bischoff: “25 years on from the original Cadbury principles, the UK’s Corporate Governance Code has greatly enhanced the quality of corporate governance and is now rightly globally renowned.” Seriously??’
The two things taken together are such a magnificent illustration of what might be the UK’s most glaring and neglected long-term problem that they are impossible to ignore. Of course Gavin Kelly, who wrote the FT article, is right: with employment regulation as business-friendly as any in the world, busted unions and management as free to manage (and pay itself) as it could dream of, there is no longer anywhere to hide: in the aggregate UK management is just not very good. Conspicuously there has been no protest about the diagnosis on the FT’s letters page,
At the end of his piece, Kelly goes off on a riff about the harm bad bosses do to worker engagement and the quality of working life in general. Well, yes. But pace Kelly the question is not about making nice but giving workers a good job to do, which plays into the bigger issue: that management has a lot more than that to answer for. If jobs, growth, dependable infrastructure and services are lacking, it’s because of management shortcomings in the widest sense. In other words, as I bore myself repeating, management has macroeconomic consequences. And, via the macroeconomy, great and unpredictable political consequences, too.
The truth is that hapless UK management is a knotty systemic problem of which people making poor decisions in offices and boardrooms are just the symptomatic part. Apart from companies, business schools, the big consultancies, the education system, politicians, civil servants and the public sector are all implicated, not to mention the large gap where an informed business press ought to be, in a web of self-reinforcing ignorance and complacency which seems impervious to assault from outside.
You might have imagined that getting something as important as this right would be a national priority. But imagine again. Perhaps the most damaging aspect of this willful blindness – a problem within a problem – is that we have no idea how bad we are. As Kelly notes, managers, like motorists, ‘tend to think they are better than average’. Exhibit no 1 in this chamber of horrors: the aforementioned Sir Win Bischoff, chairman of the Financial Reporting Council, who in a speech of astounding complacency in January celebrating 25 years of the UK governance codes, showed no sign of appreciating how deeply they are implicated in what has gone wrong.
Thus the UK’s ‘globally renowned’ governance code signally failed to stave off Carillion’s collapse. Nor does it offer any protection to the likes of Unilever or GKN, two substantial corporate citizens obliged to make damaging concessions to bribe shareholders not to sell out to opportunist bids from break-up artists. There was not a word from Bischoff about the code’s failure to nurture a viable UK manufacturing sector, nor about long-playing conflicts of interest at the banks and their auditors. Most of all, not a hint of acknowledgement that the shareholder-first ideology that the code explicitly enshrined for the first time in 2006, just before the 40-year experiment proved its failure by almost blowing up the world financial system, is directly connected to the finding, which Bischoff did deign to note in passing, that ‘public confidence in business has been diminished’ and the 'perception that business is not delivering for all’.
The fact is that the regime prescribed by the City code is no healthier for a corporation than a diet of fast food is for humans. It provides a short-term hit but in the long term leads to obesity, a weak heart, myopia and early demise. It locks in place the sterile, bureaucratic, command-and-control management that makes for the destructive workplaces that Kelly complains of; it also anchors the obsession with budgets and control that prevents managers seeing how their sky-high costs and dismal service are two sides of the same coin, and kills off customer-focused innovation at birth. No wonder people are unhappy. The same killjoy methods have been imported into the public sector via the New Public Management, with predictable results; and possibly most insidiously have encouraged politicians to outsource their most important capabilities to the market, so that – ironically, despite the Brexit vote – the last thing the UK has the ability to control is its own destiny.
The Brexit omnishambles is of course the culmination of UK management fecklessness, undertaken apparently without any system awareness or anticipation of likely consequences, eg for Ireland. Could the bruising negotiations, plus the mockery of the rest of the world, at last cause people to make ‘a link between the state of British management and national prosperity’ and ‘trace persistent managerial weaknesses back to root causes’, as Kelly hopes? It would be nice to think so.



 

 


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User comments

Douglas Board :: 7th Mar 18
I'd love to be proud of my country, or at least the shared dream evoked by (eg) the 2012 Olympic opening ceremony. How long ago that seems. 'I bore myself repeating': words which remind me of words spoken very quietly by a S African anti-apartheid activist friend,with some experience of torture: 'Pain in never boring.' So, answering the call of pain, here is a (sad) prediction. Come 2022, or possibly 2025, whether we leave the EU with or without any 'agreement', it will soon become British history that 'we wuz robbed; the treaty, or the absence of one, is a gross unfairness and an insult to our curdling national pride; and ... enough said? Versailles, etc?
Paul Reading :: 7th Mar 18
This is exactly where the Brexit idealists are heading as it will let them avoid any blame when the dream fails to materialise. They can continue to blame foreigners. The poor and the indebted will then look for a Trump to deliver what was promised.
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