Category Archives: Politics

Osborne’s employee rights sacrifice, equity for all scheme

Do politicians really think through the ideas they float?  Do they have any idea of the realities of business and especially the entrepreneur?  Come to think of it, do they have any idea of the complexities of business?Osborne's employee rights sacrifice, equity for all scheme

As a retired businessman who ran, bought, created and sold businesses, large and small in over a dozen industries, I have a reasonable knowledge of the problems facing business owners and the people who work in them.  I also spent many years in the layers below the top to have a fair understanding of the issues that face employees, what concerns them and what doesn’t.  Let’s start with the problem that Osborne is purporting to solve, the great employee rights and employment law burden.

Before the current edifice of employment law was created and forced onto business the policies that determined how employees were recruited, trained, paid, promoted, cared for, pensioned and fired were largely at the whim of the employer.  What this meant was that all of these factors were points of differentiation that clearly separated good employers from their bad competitors.  Working for Unilever in the 1960’s I enjoyed benefits and practices that would still be regarded as outstanding even today.  Has the welter of employment law really made things better for the average employee in the average company?

Consider first that small and medium businesses (SME) account for 99.9% of all enterprises and 58.8% of private sector employment.  To the vast majority of these businesses employment law brings little benefit over and above that which enlightened owners and managers strive to achieve without the aid of the law.  But it also brings huge compliance costs and the threat of many disgruntled employees running off to employment tribunals.  Today a malicious ex-employee can wreak havoc upon a good employer.  Maternity leave can also create a nightmare for small companies.  There will always be bad employers just as there will always be bad employees.  We must ask ourselves what we have really gained by forcing policies borrowed from some of the country’s (and the world’s) largest companies onto our SMEs.  And that is before we should ask ourselves what role corporation tax and employers national insurance contributions do for employments levels.

So, if Osborne is recognising at least part of the problems facing employers here in the UK with his equity for rights proposal, shouldn’t we be applauding his scheme?  Sadly, I don’t think we should.  I believe that it is another dose of borrowing concepts of best practice from the largest corporation that will do nothing for the 58.8% of private sector employees who work within the SME sector.  And nothing for the company owners of these businesses.  Let me explain why.

There are already employee share ownership schemes that are used by large companies.  Usually these shares encourage employees to save and should they leave or require the cash then there is a very liquid market waiting to buy their shares.  The risk, of course, is that the value of the equity falls (remember Northern Rock).  Overall these schemes do not represent more than a fraction of the total equity of the company and do not carry voting rights or eligibility for dividends.  Are they effective in engendering concepts of ownership amongst participating employees?  Or are they just a savings scheme?  Would such a scheme encourage employees of these large companies to give up their rights?  And would having two tiers of employees be of real benefit to the company?  You decide.

However, when we turn our attention to the SME sector the problems become significant.  In privately owned companies equity is usually guarded closely by owners or can be very limited in number (£100 companies are quite common).  The reason for this is quite simple.  For those owners who wish ultimately to sell the business to achieve a return, then they wish to retain the largest percentage of equity they can.  For those businesses that are run as family concerns then there is little intention to sell and equity is often held in a web of different generations of family members and trusts.

There could be attractions for an SME to set up such a scheme as a means of opting out of employment legislation.  Any benefit for the employee could be completely illusory.  Why?  The issued value of any shares provided in such a scheme is likely to be low and any return only available when (and if) the company is sold.  Given that there is no market in equity held in privately owned shares, any departing employee (for good or bad reasons) would be at the mercy of the company in deciding a price for buying them back.  The cost of setting up such a scheme would be quite high.  Would it raise meaningful sums for a startup or early growth business?  Not a chance.

Of course there are already businesses run as cooperatives but these are tiny in number.  There are also those businesses who run employee share ownership schemes, these usually being very large companies with differentiated cultures and attitudes towards employees.

In my view if Osborne really wishes to help both private employers and employees he should scrap swathes of employment legislation (as it frequently strangles employment opportunities in 99.9% of private enterprises).  He should also reduce or eliminate corporation tax and employers national insurance contributions both of which act as a tax on employment.

Time to scrap the idea, George.  conference season is over for another year.  Just go and talk to a few SMEs before the budget.

Image courtesy of guidetowomen.wordpress.com

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The Business of Life Chapter 24 – can success come from losing?

I had settled into the pattern of a weekly commuter.  Monday mornings would see Denise dropping me off at Leeds-Bradford airport to catch the first flight down to Heathrow where I would switch terminals to catch the next Swissair flight.  Because of the time difference, I didn’t get into the office much before noon.  On Fridays I managed to flee the office by late afternoon in time to catch the BA flight to Manchester where I had arrangements with a local taxi firm to pick me up.  Frequently, I would be making mid-week trips to one or more of our subsidiaries or meeting with two of my direct reports who were based in our factories in Nuremburg and Tienen (Belgium).  Evenings in Geneva would have me either entertaining visitors or taking dinner on my own in one of the small local restaurants.  Given the uncertainty of the situation, it was my intent to save as much of my Swiss salary as I could.

Highlights were the weekends when Denise came over to Geneva.  We would visit some of the restaurants in the city centre or in the small villages on both sides of the lake.  We travelled around as much as we could at weekends and also managed to take a couple of short breaks walking in the mountains.  We also had a great week when my daughter Victoria also came to visit (marred somewhat by meetings I was required to attend).  Sundays were never a complete success when Denise came to stay as it seemed as if we were simply killing time until the time came to drive her to the airport.  The realisation that we were going to spend yet another week apart would cast a gloom over the day however much we tried to divert our attention with lunch out or trips further afield.  There was always that flight to catch and the growing realisation that the sale of the company would provide little of benefit to me.  I had pretended to myself that it might not happen (maybe no-one would want to buy us) but now the reality kicked in.

The meeting with our prospective buyers was a dispiriting occasion that only served to prove to me that, whilst our own senior management might have had no strategy for long term success, this lot had even less.  The reality was a management buy-in team (MBI) backed by CVC Capital Partners represented by Michael Smith, CVC’s CEO.  Michael Smith came across well enough but said nothing of substance to enlighten us of the plans they had for the business.  The management team comprised Norman Scoular (ex CEO of a small UK conglomerate) and another individual, Eddie Bartlett, who I can only describe (on his subsequent behaviour) as Norman’s enforcer.  Norman, pleasant enough on the surface, also said little of substance except to talk of personal responsibility for personal targets.  In turn, Eddie droned on repeating most of Norman’s utterances as if he believed that the repetition would somehow add weight to the vacuous comments.  The only concrete aspect to emerge was that we were now into the due diligence phase of the sale process.  We were instructed by our new prospective masters to respond to any questions they asked to the fullest extent of our knowledge

There was no mistaking the wealth in Switzerland, with fine houses, exotic cars, expensive shops and starred restaurants everywhere.  The Credit Suisse cash machine situated in the lobby of our building had a disconcerting habit of dispensing nothing smaller than a 200 Swiss Franc note.  This was probably fine if you were pulling out a wad of these in one of the many Michelin starred restaurants in town but was a definite problem if your intended destination was merely the local bar!  However, wealth had its positive side and my Swiss bank balance was growing nicely as a result of my abstemious lifestyle.

Having assembled my evidence on the malign effects of the bonus scheme on stock levels across Europe, I decided to discuss the matter first with Alain (VP HR).  A large Belgian man who took an equal pride in his systems and procedures as he did in attempting to demonstrate the correctness of his views regardless of the subject, he listened with growing impatience.  “Listen,” he finally roared, “I spent a vast amount of time putting our incentive scheme together and I’m not about to change it on the basis of some flimsy information!”  Knowing that little happened on the HR front without Alain’s consent I argued to myself that, without Alain’s agreement, Don was unlikely to listen either.  Instead, I decided on a different tack.  We had a general managers’ meeting due for the next week so I merely told Don that I needed a substantial time slot to impress on the assembled group the importance of accurate sales forecasting.  He agreed and the time was duly allotted for late morning.  I worked on my presentation until I was absolutely confident that the logic and rationality were impeccable.

The day of the meeting dawned fine and sunny but as the meeting room started to fill I discovered that neither Don nor Swaanen were present.  I had a quick word with Germaine who informed me that Don, Swaanen and Dan (VP Finance) had decided to play golf in Evian and wouldn’t be back until lunchtime.  I tried to rearrange the agenda to put my slot back until the afternoon but found that this wasn’t possible.  I therefore either had to withdraw the subject from the agenda or go ahead without Don.  By this stage I had no alternative but to proceed.  It was conceivable that Swaanen had got wind of what I was planning and had decided to encourage Don to take the morning off.  Events would later prove at least my first supposition to be correct.

For this meeting I had decided that the issue of the bonus scheme was not relevant, it being purely a head office decision if a change was to be made.  Instead I was intending to focus on the need of minimising stock levels across Europe and the vital importance of letting the DRP system play its role.  For the presentation I had made slides of the graphs generated by DRP showing the accuracy of the system sales forecasts versus country amended ones and the actual results.  In order not to be confrontational all the information I showed was without any country identification.  Instead I had prepared an envelope for each of the general managers enclosing the results for their country that I handed out at the end.  I made known the saving we could make if everyone could trust the DRP generated forecasts and I asked for their support.  Wishful thinking.

All hell broke loose.  Ignoring the incontrovertible evidence in front of them I was attacked on all sides by men who argued black was white.  I knew that there was a degree of animosity existing between country managers and the factory managers who supplied them but I had simply not expected this outcome.  There was simply no-one in the room who was prepared to even acknowledge that their forecasting could be improved.  By the time Don appeared he wasn’t interested in becoming involved in the subject and quickly moved the meeting on to the next agenda item.  I had failed in two battles but I hadn’t given up.

The following week we had a meeting scheduled in London for Monday and that evening I travelled back to Geneva with Don & Alain.  As we had time to kill we decided to eat at Heathrow and over dinner I raised the stock and bonus subject with Don, going over the full facts.  For some reason Don would not acknowledge that there was anything wrong with either the stock or the bonus systems that couldn’t be put right by my team reviewing every single product line forecast for every country every month.  It was both an illogicality and an impossibility and I told him so.  Don disputed this and we went around the subject again but with voices getting louder with every sentence.  Alain stated that the bonus system had no part to play in the situation.  I reminded them of the investment that had been made in the DRP system and that it was being ignored by everyone.  By this time we were all shouting at each other in the middle of the restaurant.  In the end I said that I could not achieve better than the existing system.  But, if he was serious about making an improvement, he should take the whole logistics function away from Swaanen and give it to me to manage and I would commit to making it work.  We were by now red faced and out of breath but Don brought things to a close by agreeing with my proposal.

The following day I went into the logistics department to request that a further analysis I needed be produced.  Sheepishly and with great embarrassment the team informed me that Swaanen had that morning instructed them to not even speak to me again.  When I got to see Don he also looked embarrassed and said that upon reflection overnight he had changed his mind and I must proceed as he had originally instructed.  I had lost the war.  By connivance and weak management we were wasting $10m a year in working capital and no-one wanted to even look at the root causes.  I couldn’t give up.

By this time it was clear that, unless a last minute disaster occurred, the transaction to sell the business would complete.  Feeling less and less respect for the senior team I gave up the daily ritual of lunch with them and started eating instead with one or other members of my team (something that was far more relaxing).  In a last ditch effort to preserve something of the work I had put into the goal I had been given and the findings I had made, I told Norman that I would appreciate a meeting with him as soon as possible.  The problem was that he seemed always to be travelling.  Meanwhile, Christmas was approaching and I decided to drive back to England with my son Alex.  He had been attending a French language school in Chambery, had come to the end of his course, and needed a lift home.  We enjoyed the time together and it made a pleasant change from air travel.  Christmas passed too quickly and it was soon time to return.

A harsh winter had descended upon Europe after Christmas and by the time I drove back across France the temperature was showing -18C.  I had tried to keep the situation out of my mind over Christmas but as I drove along near deserted autoroutes the situations I faced looked decidedly unattractive.   If the sale by some chance fell through it was clear that my role was going to become increasingly more difficult. I had a brain that wanted to understand the big picture and address the things that influenced it.  The problem was that I had neither the skills nor the inclination to enter into politics.  I had also by now made myself something of a pariah amongst the senior team in Geneva by fighting without fear or favour for what I knew to be right.  On the other hand if, or now more likely when, the sale went through I faced new management that seemed to hold views that were an anathema to me.

Finally, in January I met Norman for dinner one evening.  He wanted to know my views on the business, which suited me just fine.  I gave him an overview that I felt was realistic and showed opportunities.  I took him through an abbreviated version of the stock saga and shared with him the savings that could be made in working capital. However, Norman surprised me with his response that indicated he had little or no interest in the DRP system and that country managers should take responsibility for their own stock levels.  They should be completely responsible for their own results.  We talked on but it became clear that in terms of modern management thinking, Norman was back in the Stone Age.  Newco was not going to possess a culture that would play to my experience, training or skills.  A new threat wormed its way into my consciousness; what if they did want me?  A great concern.  I also had to pick up the bill.

A week or so later we got the news that the transaction had completed and Norman and his team marched into the offices.  Don had disappeared and then Norman promptly got on a plane to somewhere.  Eddie quickly took up his role as enforcer with relish.  As will have become apparent by now my view was that whilst many of the problems in the industry were structural, we certainly hadn’t made the best of the hand we had drawn.  However, that is different from some diminutive clown telling us we had all been complete idiots.  The only thing of note that happened that first week was that business class travel was banned and we all received a long lecture from Eddie on the need to save money and how life was going to change.  I’m not sure what motivational training Eddie had had but he wasn’t a patch on my old headmaster at the art of bollocking.  Life at the back of the plane on Friday evening wasn’t too bad but the signs for the future were.

A few days into the following week Alain called me into his office.  Looking less like his usual bombastic self than I could ever have imagined he fidgeted and launched into the worse version of a HR scripted Dear John speech I had ever heard.  I put my hand up to halt him, “Don’t worry about the niceties, Alain” I smiled, “Just be good enough to tell me if this lot are going to honour my contract?”  It was with relief that he nodded and handed me the paper laying out the terms of my severance, which were exactly as my contract.  Alain went on to tell me that my whole team was to be fired with just one exception   He held out his hand for my office and car keys.

At the age of 47 and after 13 years of constant commitment and effort to the organisation that had given me more highs and lows than I can now recall, I was out of work once more.

Postscript

The North American business of GTE Sylvania was sold to Siemans shortly prior to CVC purchasing the European and Rest of World business.  Europe and ROW was subsequently sold on by CVC some years later and has passed through several ownerships since.  The business is currently owned by an Indian conglomerate and was the subject of an article in the Sunday Times (22 July 12) describing the difficulties they had in changing the company culture.  

My inactivity in the ‘non-job’ referred to above did not in fact stop me from carrying out a very detailed research project to establish the viability of the Linolite brand.  The results I obtained indicated that attempting to extend the brand’s franchise was not a viable proposition; this was ignored and the product range I had developed was rebranded Linolite despite my stiff opposition.  Today the Linolite brand is no longer owned by Sylvania (which has gone on to develop its very successful industrial and commercial lighting fittings identity) and appears to have a very limited market presence.

Greg retired to Florida where I understand he still lives.  Don now works for a small venture capital company owned by a past GTE Sylvania president.  Alain still lives in Geneva where he runs a successful multinational HR consultancy.  Swaanen was persuaded to stay with the business.

Norman died on Swissair flight 111 in a crash over the Atlantic in September 1998.

Image courtesy of  www.Fecielo.com

The business of life (chapter 14 – taking stock)

In August 1980 our Olympic Team made their way back from Moscow with a medal haul that included 5 golds (making us ninth in the table below Hungary, Romania and Bulgaria…..), the miners were once again threatening to strike (for a 37% wage increase), GDP had plunged by 1.8% and inflation was over 20% once more.  The Abba hit ‘Winner Takes it All’ was topping the UK singles chart reminding me that losers take nothing save what they learn from their experience.

My career had come to an ignominious halt at the age of 34, after 15 years of continuous success in each and every role I had undertaken,.  I had been fired, let go, out-placed, canned, released, suffered position elimination or whatever euphemism you care to use.  The initial emotions were a combination of relief from the stress of a role that had become hellish followed by profound shock.  These feelings of numbness then lasted for a few days before pure, frustrated rage took over.  My wife suggested that we take a short holiday to visit her parents in Scotland and I agreed.  Even after all these years I am still horrified at how I let my rage build up in my mind and show in my driving on the trip up to Perth on a busy Sunday afternoon.  I can only think that I was suffering temporary insanity and that someone or something was protecting our family that day.

The beautiful Scottish countryside soon started to work its magic on me.  Being a London lad who grew up surrounded by towering tenements, the joy of being amongst hills and mountains is something I never cease to find humbling in an extreme.  There is an incredible feeling of  the permanence of mountains that never fails to bring the fragility and pettiness of my insignificant life into perspective.  I slowly began to unwind and take stock.  Yes, I had been correct in my choice of communications strategy and all of its elements.  I had also been smart enough to monitor the return I was getting on every pound of my budget.  So I knew that I had achieved incredible value for money and results, not just by realigning brand image but also by raising awareness across the general public.  These improvements in awareness and image had resulted in dramatic increases in sales and allowed us to establish Akai in the vital new sectors of home video recording and racked HiFi systems. My financial planning had accurately projected our cash requirements and managed to keep the bank onside through the most trying times.  I had successfully planned and executed the moves to our temporary and new premises without a hitch and brought warehousing and servicing in-house.  These were the pluses.

Being brutally honest however, and looking at the negatives, I realised that there were aspects of my role that I had neglected or performed less than satisfactorily.   Without a shadow of doubt, I had simply been promoted too far, too fast and with insufficient training in a number of less than glamorous but key areas. My administration systems were woeful and unless I had a keen interest in an area I had tended to ignore it until it became a problem.  What I didn’t realise at the time was that, whilst I knew that a combative personality, intense competitiveness and ambition had driven me on and played their part in my success, other aspects of my personality conspired against me.  It took me many more years to realise that a lack of real listening ability, cultural understanding, guile and political skills had also played a significant part in my downfall.

Looking critically at my role at Akai I deduced, at the time, that not having total control of the business (as I had had in my two previous business management roles) had hampered me.  But when combined with an almost complete lack of political skills, I had been hamstrung.  Critically, I also  realised that I had not built a support group that I could rely upon for honest and appropriate advice as I had been fortunate enough to have in my previous roles.  The relationship I had had with Andy when he worked for me in the RAV business had never been one that I had been comfortable with; I felt that he had merely tolerated me.  With the move to Akai he had clearly sought to exploit the friction that grew between Yokose and me over strategy.  Whilst my relationship with Gordon had been a cordial one, and he had certainly been responsible for twice promoting me, his hands-off approach to the business and lack of guidance to me had not helped.  I probably made a convenient sacrifice once the going got tough. I had clearly been suffering from hubris and the inability to realise that which I didn’t know (the unknown unknowns that Donald Rumsfeld would admit to some twenty years later).

The more I tried to understand what had gone wrong (and this was something that I continued to mull over for many years), the more I realised that I had never taken the time to really analyse all the things that had gone right for me.   The intervening years have taught me that the actions taken in pursuit of a goal may not be the only factors that produce the result.  It has also become very clear to me that just because something worked once (or twice or more) it is no guarantee that it will always work.  However, I realised enough at the time that I had to become even more analytical and learn to take a far broader view of situations. I vowed to change.

Back in Henley a sense of calm and freedom settled upon me and helped produce some of the happiest months I can remember from that period.  I had time to share with the family, time for myself to regain fitness (rowing and running) and time to plan for the next stage in my career.  Yes, the UK economy was worsening as it slid into the deepest recession since the second World War but that didn’t worry me.  Despite the shortcomings I had become aware of and the hair shirt that I had donned, I knew that I had a CV full of solid results and that the business world more than ever required those who could prove they could deliver results.  I was confident that I would win that next step on the career ladder and pushed the doubts on my shortcomings to the back of my mind.  I had enough money to last a year or more and I was determined that the next role I got was going to be a serious step forward.

I had a single new goal to focus on.

 Image courtesy of The Guardian

The business of life (Chapter 13 – hubris strikes)

The once enjoyable relationship I once had with Akai colleagues in Japan as their distributor, was changing quickly into a nightmare now I had joined the new business in the UK as an employee.  Constant requests for information and action came fromTokyo at all hours and I learnt quickly that the Japanese would simply not accept the failure of any plan or compliance with mere instruction.  Decisions seemed to take forever and I found that the much vaunted system of collective decision making in Japanese companies wasn’t because it was more efficient, or more motivational, or whatever the text books were claiming; it was simply to avoid personal responsibility if things went wrong. Seppuku may have been no longer practiced in its literal form in 1980 but it certainly lived on in a metaphorical sense.

The promised further injection of capital never materialised and more than once I was required to present a re-working of the financial budget at a week’s notice or less and to jump on a plane toTokyo to present it.  The journey to the bank also became a well trodden path delivering regular cashflow projecions.  On one occasion when I met Yokose at Heathrow one Saturday afternoon for yet another trip he looked like death.  It transpired that he had last slept on Wednesday evening and had continued to work through the next two nights merely allowing himself a change into pyjamas and slippers.  He worked all through the flights toTokyo and again through Sunday night following the inevitable initial rejection of our latest business plan.  Witnessing this I began to feel increasingly uneasy over my decision to join a company with such an alien (and to me inhuman) culture.

I was beginning to become selfish when it came to working beyond 18 hour days and the stress was rising.  One evening arriving home yet again extremely late and completely exhausted, my phone rang and I answered it to find  it was one of the Japanese on the phone demanding I return to the office to deal with something minor.  “It is your duty!” I was informed when I suggested that it was not an emergency. I snapped, said something inappropriate and slammed the phone down. Grabbing a bottle of Scotch, I slumped in a chair and knocked back a stiff shot.  The next thing I remember was finding myself on the floor clutching my stomach feeling like I had been stabbed through.  Although not diagnosed precisely as such at the time, subsequent events led me to realise that this was the start of stomach ulcers.  My doctor gave me stern instructions to take three weeks off, stay away from alcohol and to take things easier in future.

Gordon was supportive but more than a little surprised when I declined a drink with the lunch we had together just before I returned to work.  The pressure from Tokyo to increase sales was growing weekly.  Our results were still improving strongly (and were on course for a 50% total increase since the new company started and would be trending steeply upwards at a running rate of £13m p.a.) but this was still not enough to satisfy our masters.  The problem for us in theUK was not profit but cash and they would not accept that the relentless pressure to increase sales was fuelling a demand for working capital we couldn’t finance from our own resources. Tokyo management had reneged on its promise of further cash injections and our bank was getting more and more nervous about increasing our facilities.

My large marketing budget soon came under attack and I fought back strongly with all the logic and all the evidence I had that our strategy was working.  I put forward the most robust evidence of the brand share increase we were gaining (especially against arch rival Pioneer, which should have been greatly satisfying to Akai) and the danger of reducing momentum.  I felt let down; Akai had agreed my business plans, promised more capital support and we had delivered everything and more that been promised in terms of results.  Our marketing mix was working and I wasn’t about to roll over and see ourUK position worsen.  My natural inclination to meet opposition head on came to the fore and I continued to resist.  Sorely in need of a break (and heeding the warnings about my health), I departed with the family for a glorious holiday touring California.

Returning refreshed I found that the situation had worsened, finding Andy planning a frankly amateurish sales promotion campaign, which he had not discussed with me (and was now trying to avoid doing).  Yokose started in on me immediately, telling me that Andy had assured him that this promotion would compensate for cancelling the majority of our communications programme. I responded that the problem wasn’t one of our dealer network not buying enough, it was of chronic under-capitalisation.  At a time of intense competitor activity to establish leadership in the new VHS and racked HiFi systems, I reasoned that we would lose all of the ground we had won.  Worse, we would find it almost impossible to recover again.  Yokose simply would not listen and fell back on that logic resistant mantra that seem to be drilled into Japanese people from birth; “We have to manage somehow.”  I realised further discussion with him was impossible and beat a retreat thinking that perhaps I could yet convince him.

The following week I was working in my office one afternoon when I heard three hefty thumps on the dividing wall between my office and Gordon’s (his usual manner of attracting my attention).  I smiled to myself and walked into his office.  By then we had an easy going relationship (except when he was ‘in his cups’ after one of his ‘networking’ lunches) and I expected he wanted to chat.  “Boy, you’ve got a problem with the Japanese.” he said immediately and thrust a plain white envelope across the desk at me.  I went cold realising what was in the envelope.  “If this is what I think it is, is the situation negotiable?” I asked, looking him in the eye.  “I’m afraid not,” was the response, “but you’ll see it’s generous and, between you and I, I’m happy to tell anyone who asks that you resigned, needing a change or whatever you decide to say, and are still working for us on a contract basis.”

I hadn’t exactly put the sword in my own hands but the effect was the same.  I had been fired.

 

The business of life (chapter 12 – achievements grow but so does the stress)

On May 3rd 1979 a lady named Margret Thatcher won the UK General Electionwith a Conservative majority of 43 seats.  I had taken relatively little interest in politics up until this point, the economic upheavals of the 70’s scarcely touching my life (apart from the horrendous queues for petrol during the Arab oil embargo, the opportunistic but deeply unpatriotic miners’ strike and the power cuts).  However, I was aware that things had to change or Britain would be consigned to economic oblivion and with it all hopes for my career.  The events that followed caused me to believe that Maggie had brought me some luck along with her own (at least for a while).

Margaret Thatcher wins in ’79

The weeks dragged on with no news of Akai’s plans for their own company.  Sugino had gone to ground and wasn’t returning calls.  Surely they would want to retain the people who had turned around the UK business?  I wanted to hope that this was the case but it seemed that a wall of silence had descended over the situation.  Meanwhile, I applied internally for the position of business development manager for the division.  Whilst I knew that I wasn’t ideally qualified for the role, I considered that I had convincingly demonstrated my ability to adapt and learn fast.  However, I wasn’t prepared for the brusque treatment I received from our personnel director when interviewed.  It was if he was merely going through the motions having already decided I wasn’t right for the role.  Curious.

The mists cleared some days later when I received a call from a member of the Akai management who introduced himself as Yokose.  He was inLondon and would appreciate a meeting at his hotel; was I free that afternoon?  Yokose transpired to be a short, slightly built man in his early forties with an intense manner.  He got straight to the point; would I join the new company? I replied that I would consider the role of managing director (my natural competitiveness quickly resurfacing).  “Ah, so sorry,” Yokose responded with a curious smile, “not possible.  Other roles are possible. What you wish.”  Assuming that it would be Yokose himself in the role of MD and more of a titular head, I proposed the role of general manager.  “This one would be possible,” was the response, “but cannot include sales.”

During the course of the afternoon I found that Yokose had already spoken with Andy and appointed him sales manager. This was not something that pleased me as I had an uneasy feeling about Andy.  Putting this concern aside (his appointment being a fait accompli) it was clear that I was wanted and so I negotiated hard on my package.  I won a significant salary & pension increase and a large new executive car.  I agreed to start work at once on the detailed planning for the new company; a very tight schedule was in prospect.  Back at the office I met with Andy and discovered that he had no more information than me.  Putting my reservations over Andy to one side, I asked him to start work on the sales projections so that I would have a basis for the detailed financial planning that was urgently required.  It soon became apparent that a significant investment was going to be required by Akai to set up the company and fund the planned growth. “Not problem.” was the response I got from Yokose a week later when I put the initial projections to him, “Please to proceed, much haste.”

Gordon’s secretary rang when I returned to the office saying that he wanted to see me immediately.  Wondering where he had been hiding for the last few weeks I took a welcome break from the planning and went up to his office where I was greeted by an unusually jovial Gordon.  Ushering me quickly into his office, he made sure the door was firmly closed before turning to me. “Welcome aboard.” he grinned.  I gave myself a mental kicking for not having worked this one out.  Given that Gordon’s role as divisional MD covered an extensive range of RAV businesses I had not assumed for one moment he would leave to head up Akai.  It wasn’t until some time later when I had to have the full details to complete the business plan that I realised just how good a deal Gordon had negotiated.  However, given Gordon’s hands-off operational style, his devotion to networking and a penchant for very long lunches (and dinners) it seemed I would continue to have a great deal of operational freedom.  Yokose was going to join us as a UK based non-executive (sadly, it wouldn’t be long before he had earned my private nickname of tachograph).

Despite keeping his head down whilst negotiating his exit package from RAV, Gordon had already used his film industry contacts to find us premises.  Our new company home was to be in  the Production Village, a television studio and entertainment complex in Cricklewood set up by Samuelsons (manufacturers of film equipment) in a part of the disused Handley Page factory.  These premises seemed to be entirely in keeping with the image I was striving to build for the brand.  I set about recruiting the remainder of the team we required, setting up systems and leasing cars (Gordon having already lined up a Mercedes 450 SE for himself).

The bad news was discovering, despite Yokose’s prior assurances, that Akai’s capital injection into the new UK company was completely inadequate for our needs.  This news meant that we required a substantial amount of working capital at commencement and growing steadily to finance the growth we had planned.  Despite Akai’s success in Europe they had never succeeded to the same extent in the USA where they trailed significantly behind Pioneer and sold largely under the Roberts brand.  It transpired that the US swallowed up large amounts of Akai’s financial resources.  Following many negotiation with our bank they agreed to fund the working capital at start up providing the Tokyo parent company assumed responsibility for our UK borrowings.  This was negotiated and allowed us to start trading but I was involved from this point on with constant re-budgeting, presenting in Tokyo, going back to the bank and starting all over again.

With largely a new team in place, we started the Akai UK business in a blaze of publicity.  With a marketing budget well in excess of £1m I had no shortage of funds.  In another of those serendipitous moments our advertising agency found that Manhattan Transfer were about to tour the UK and we moved quickly to tie up a deal with their agent as sponsors. The sponsorship deal gave us the right to use the group for television and radio commercials in addition to personal appearances.  A TV commercial was fleshed out, Bray Studios booked and we managed to secure the direction of Ridley Scott (fresh from his success with Alien). In one exhausting session of almost 18 hours the Akai commercial was shot (http://www.youtube.com/watch?v=XwYldNBNB-c and proved to be incredibly successful in boosting the image and awareness of the brand.  Radio advertisements followed quickly plus some absolutely hilarious personalised dealer radio advertisements ad-libbed by the group.

In parallel I progressed work on a launch party and secured The Talk of The Town just off Leicester Square in London plus the services of Michael Aspel as compère for the evening.  With hundreds of our customers and their guests gathered in this great venue we put on a magnificent show including Richard Lloyd and his racing car rising out of the stage in a very noisy finale.  After just a few hours sleep, and still exhausted, I flew off to Florida with my wife and children for a blissful couple of weeks in the sunshine.

Akai Audi 80

Akai Audi 80

Back in London I started work on our plans for the following year.  Richard Lloyd had negotiated a switch to Audi for the 1980 season and our sponsorship continued.   In an incredible piece of good fortune we managed to sponsor Stirling Moss’s return to motor racing as the number two driver to Richard.  Ex Porsche works driver Vic Elford was recruited to be team manager. Sensing that we had to do something spectacular for the launch, I engaged a production crew to shoot footage of Richard and Stirling driving at Silverstone and commissioned what I believe to be the first ever multi-screen film (nine moving images on one screen).  A press launch took place at The Production Village next to our offices for the Akai Audi team of Richard & Stirling.  Every TV and radio company was handed film and soundtrack and it proved so successful that it produced over £3m worth of TV, radio and press coverage in just one week.

Alan Jones

Word of our sponsorship activities was spreading fastproducing dozens of approaches, most quickly discarded, but there was one approach that also stood out head and shoulders above the rest.  Alan Jones, a new Australian Formula One driver, was looking for personal sponsorship and we did a two year deal with our brand on his helmet. During 1980, Alan went on to win grand prix races in Argentina,Great Britain,Canada and theUnited States, making him the World Champion ahead of Nelson Pique; the publicity for us was wonderful.   A sponsorship deal with Kork Ballington (double World Champion 250 & 350cc) and Kawasaki soon followed.

Kork Ballington

The media coverage continued to flow and an invitation to join the Akai team at racetracks around the country became very sought after.  That summer almost every weekend was spent entertaining our dealers and sales rose steadily along with the hours I was putting in each week.  The acquisition of a large Kawasaki soon had me roaring around the Oxfordshire lanes frightening the life out of my young son who clung on behind for dear life.

Hearing Barry Sheene (500cc World Champion in 1976 & 77) was departing the Suzuki works teamand competing alone on a Yamaha; we leapt in to conclude a deal for sponsorship of Barry and his bike (including a replica for use in promotions).  All of this sponsorship was accomplished at incredibly advantageous rates and proved spectacularly popular with our target market.

Barry Sheen

Barry Sheen

Another major project I had running at the same time was that of locating new premises and organising the move.  We were existing only by subcontracting warehousing, distribution and servicing and this couldn’t continue.  I located a new industrial unit and offices located at the eastern end of the runway at Heathrow, signed the lease and set about planning the layout and organising furniture, phones, warehouse and service department equipment.  The move shortened my commute but now every weekend was spent at one motorsport venue or another around the country or entertaining customers (often in the company of various celebrities of the day).  Sales were still climbing but the personal strain was enormous.

By this time I was working 80~90 hour, 7 day weeks and this pattern, together with other aspects of my personal life, was taking a toll on my marriage.

Something had to give.

Margaret Thatcher image courtesy Daily Mail, Akai Audi 80 image courtesy of Spirit.com, Alan Jones image courtesy of Morem Sports History, Barry Sheene image courstesy of Wikipedia Commons

 

Quiet leadership (secrets of success part 4)

Sometimes it’s not what you say that counts or even should be counted; what you don’t say can be incredibly more effective in producing the optimum result  Leadership still draws more opinions, words and books than almost any other subject in the world of business.  Effective leadership involves a variety of styles matched to the needs of the situation, the nature of the team and, not least of all, the makeup of the leader.  Yet despite this, the picture painted of the average leader is that of the powerful, thrusting individual, soundbite opinions flowing, forcing the direction towards the desired result.

Image courtesy of gsykeslight.blogspot.com

One of the great leadership learning experiences that took place during my mid career years concerned a situation that frankly gave me real pause for thought and sleepless nights up front. When I became managing director of one of the major firms in this particular industry, I joined the industry trade association and sat on the governing council (comprising some 16 CEOs of the largest members). I had been a little over-awed not only as the youngest member on council but being the only one who had not spent his entire career in that same industry, I had been talked down to and treated very much as the junior. So, having kept a low profile for the first couple of years was then astonished to be asked to take up the role of president.  At first I couldn’t work out what had raised my profile to warrant the appointment. But by the time I made my acceptance speech and took the chain of office in one of London’s oldest clubs and with a Government Minister as my guest, I had worked out what lay behind my appointment.

Long held, polarised and explosive views were held across the membership on a range of partisan issues.  The association (which set technical standards for the whole industry and ran a highly effective parliamentary lobby group) was facing a particularly critical issue at the time that threatened to pull the association apart.   I perceived that none of my largest competitors (which were and still are household names) wished to be seen to preside over an issue that could be a PR disaster for them.  On the other hand, there were a large number of member firms in the association holding the opposing view. An additional and uncomfortable fact was that the CEO of my largest UK competitor sat alongside my boss (our European President) on the board of a joint venture company in Italy.  I had already experienced the effects of some highly misleading information that had been fed to my boss via this relationship. Had I been elected as a scapegoat?  Was I being set up to fail?  Would the whole process be represented to my boss as a calamitous failure on my part?

Deciding on a policy of diplomacy for my year of office, I felt I had to ensure that all views on the subject should be heard and taken into account before a decision was made.  I had clear views of my own as to which route the association should take but reasoned that making these views known was only going to make my task harder.  And, anyway, I calculated that my company could exist equally well under whatever regime emerged.  Attempting to force my views on council was not going to work given my image as the outsider who was believed to know less of the industry than anyone else around the table. Therefore I decided that the process should take priority, be seen to be inclusive and fair and should lead to whatever the membership ultimately decided.

I ran my council meetings in the classic chairman’s style, ensuring all views were fully explored but never revealing a viewpoint of my own.  I found that by a policy of correct process, questioning and ensuring everyone’s’ opinions were sought, all relevant opinions and options could be uncovered.  I carried this process through to the wider membership travelling to regional meetings up and down the country where I again chaired the meetings to ensure that every aspect of the subject was explored and again never taking sides.  I also ensured that I held one-to-one meetings with the holders of the most entrenched views (large and small companies), always travelling to meet them in their own offices.  At the end of the year when the time came for a decision, the vote was almost unanimous with everyone feeling their view had been heard, considered and the right decision made.

One surprising and pleasing outcome for me was that several of those who had held some of the most rigid views at the outset felt able to cross over to the opposing side without losing face. Additionally, the few members who voted against the final decision, came to me and said that although disappointed they felt that the process had been fair and the decision was one they could support.

In the course of my career I have certainly been faced with a very wide variety of situations including those where I had to demonstrate clear and decisive leadership.  However, looking back I gain immense pleasure from my time as the industry association’s president because it gave me the chance to be a quiet leader; one who found that seeking out all views, really listening and trusting the team could, in those particular circumstances, produce a sound result (and one that has endured the intervening years).   It’s a technique I’ve returned to many times when the circumstances warranted and it has invariably worked.

Shouldn’t we care more for our elders?

Yet again we have more terrible news of the failings in our much vaunted National Health Service.  The Care Quality Commission today reports on its findings into inspections at 100 acute NHS hospitals inEnglandand announces that fully 20% were not delivering care that met the standards the law says people should expect in terms of dignity and nutrition.  One in five hospitals failing to meet legal requirements in these basic areas despite the additional billions pumped into them over the last decade or so.  How can we spend so much and get so little in return? Why does such a large section of the caring profession get it so wrong?

Image courtesy of Nursing Times

As I’ve blogged before (‘No way to run a health service’ June 2011) I’ve had both first hand experience of our NHS, been married to a health professional and seen some of the failings at first hand. Now don’t get me wrong if you think that I’m someone who doesn’t believe in our health service; it has saved my life on two occasions. But that doesn’t mean that it is without blemish. Just consider, it employs c.1.5m people and, sure, not all of these are going to be up to scratch in the care stakes. But 20% of hospital failing to meet legal requirements? A sad but true story first.

A few years back my late mother was admitted into one of the major London teaching hospitals as she had suffered a fall. I travelled the long journey down to visit as soon as I got the news and what I found shocked me to the core. Mum was groaning in apparent and considerable agony some 20 feet only and in full sight of the nurses’ station where 7 or 8 nurses and doctors were doing various things (including sharing jokes). It transpired that mum had received no assistance to relieve herself since being admitted earlier the day before and clearly had been ignored. Any ‘profession’ that can permit this level of indignity to be visited on another human being has serious failings.

The National Audit Office in a separate report today finds that 80% of hospitals were in some financial difficulties and two thirds had weak leadership and management delivered poor quality care to patients. According to The Kings Fund, of the funds invested in the NHS under Labour somewhere over a third went on increased salaries “and the returns, in terms of better care, higher productivity are somewhat elusive so far”. So, despite an increase from £52.9bn in 1998 to £118.3bn in 2010, nothing much to show in efficiency gains. Now, if as a chief executive of a public or private company I had gone to shareholders and asked for this sort of percentage increase and then said I had nothing very much to show for it, what do you think my survival chances would be? Especially if I had incurred a far vaster liability in terms of ‘off balance sheet’ (in the form of PFI) commitments for years to come

Now to be fair, the Government had to pay for the effects of the EU working time directive for junior doctors and for sharply increased costs of criminal negligence claims. But who agreed to the former and who created the environment for the latter? Sure, the cost of drugs rises inexorably but the waste in the system is incredible. There is almost no other subject that gets politicians and the public rushing to their respective corners as the NHS. It’s curious but mention profit in connection with healthcare and it’s battle stations at once. The fact that a private company might be efficient enough to make a profit is anathema to the likes of the Guardian readers. But mention that an equal or far greater amount is being simply wasted and you get a shrug or, at best, hands wrung, eyes averted.

The adverse effects of shifting demographics have been known to governments for over 25 years and caring for our elderly is going to take more than a few platitudes. Democracy has failed us because, frankly, the political elite haven’t had the guts to tackle the issue of funding healthcare in a sustainable manner. Does it matter if the care my mother (or yours) receives or the dignity she is afforded came from a profit making organisation that didn’t waste the funds we invest from our taxes? The health professionals may be capable of delivering care but don’t kill them with targets. And just because we are talking of professions don’t fall into the trap of assuming they know how to lead a multifunctional team and manage vast budgets.

The NHS was, in fact, an all party wartime coalition effort (despite the fact it was a labour government that was in power to introduce it in 1948). We are now in the midst of a crisis in healthcare that has been decades in the making and it will take a great deal of time to come up with a sustainable solution. We need, somehow, to take control of the means of a solution out of the party political system.

Don’t we owe it to our elders to spend their final years with dignity? They brought us into this world; shouldn’t we try to make their passing as comfortable as we can?

Destroying loyalty

Why do companies seem to have given up on attempting to retain customers?  Why do I now feel ashamed to mention my early career in marketing?  Where did it all go so wrong?  The answers are rooted in many short-termist, introspective and isolationist policies on the part of management.  Businesses are not by and large run on a holistic basis and are frequently focused on strictly functional issues.

Image courtesy of pawposse.com

On average, US corporations lose half their customers every five years.  Research by the US Customer Care Institute reveals that:-

  • Seven out of ten customers who switch from one company to another give poor service as the reason.
  • Dissatisfied customers tell twice as many of their friends and families about poor service as do satisfied ones.
  • It is five times more expensive to gain a new customer on average than it is to satisfy an existing one.

Recurrent studies have found that the longer a customer stays with a company, the higher the profits generated.  This is not new and my time in businesses large to small tells me we are no different here in the UK.  The following are but a few of what are sadly common barriers to customer loyalty:

  •  Building labyrinthine complexity into pricing plans – have you tried to decide which the best value mobile phone tariff is recently?  Do you believe that any phone company genuinely offers its multitude of pricing plans so that we have more choice and will be more satisfied? Is it any coincidence that we have to threaten to move supplier before being offered a better tariff?  If you do think so, move along now, nothing more to read here.
  •  Outsourced ‘Customer Care’ departments  – a trend that started 30 years ago and  one that is till going strong clearly treats engagement with customers as peripheral and no more worthy of direct involvement than cleaning the office washrooms.  It’s not merely cultural or language differences that are created when you move your customer interaction functions to India (or toGlasgow or  anywhere outside the company), it’s the creation of a total barrier that isolates management from the true customer experience.
  •  Moving to part-time staff – some staff appreciate the ability to work part time but many have this practice forced upon them.  The ultimate extension was that most cynical policy, the “Zero Hours Contract” where staff is guaranteed no work hours at all, merely being required to respond at short notice when required.  In a well-documented and infamous variant, staff in a well-known hamburger chain was required to sit unpaid in the staff room when the restaurant became quiet. Any guesses as to how they felt about this practice? Research has shown that retail chains that stayed with full time staff experienced higher customer retention and higher profits than chains that turned to part time working.  Full-time staff was also found to be more loyal to their employer, more knowledgeable and was rated more highly by customers.  It is no coincidence that good staff retention goes hand-in-hand with above average customer retention.
  •  Creating loyalty premiums – many years ago I found to my horror that the interest rate on my hard-earned savings had been dropped to near zero by a certain northern British bank; my account, once paying a top interest rate was now classified as ‘obsolete’.  Hitherto unknown, this practice quickly became commonplace amongst our banks and building societies and the public quickly learnt to check rates and shuffle their savings accordingly.  How can the banks have imagined that this insidious technique would engender loyalty?  Instead, having inflicted this monstrous, zero sum game of monetary musical chairs upon us, we, their customers are now referred to as ‘rate tarts’!  Having rapidly moved my money, I watched the fortunes of this bank soar and then noted with grim satisfaction when they became the first to be exposed as insolvent in 2008.
  •  Inflexibility of some industries – if I want to buy a car, I can choose from a vast range of standard product offerings (all capable of easy price and performance comparison).  If I wish to wait longer and customise my new vehicle then I can choose from a vast range of options to turn it into something that as closely meets my needs as it is possible to get.  In comparison I remember an almost surreal conversation with my local bank manager some years back.  No, I didn’t want free breakdown service, travel insurance or yearly meetings with a financial adviser.  All I wanted was a stable interest rate for my savings (e.g. linked to the base rate) and the phone number of the branch manager to ensure I got problems resolved easily.  At the time I had business banking for three separate companies in addition to my personal accounts, so I wasn’t quite at the bottom of the pile.  After an hour of wrangling (I was bored that day) I managed to get the phone number (after I ultimately promised only to use it in the direst of emergencies).  No rate guarantees though.  Nothing else.  And the phone number was a pyrrhic victory; a few months later the manager moved and the phone was diverted to the call centre.
  •  Drip Pricing’ – I have blogged before on this subject (‘Don’t be a marketing drip’) but I am still amazed at how more and more companies are using this technique to pad out the price of a purchase.  It is common to find that on a like for like basis the ‘low cost’ airline is more expensive than the ‘full cost’ one.
  •  The small print – entering into any form of business with a bank, insurance company or many of the largest companies really requires the service of a commercial lawyer to unravel the terms.  It is quite beyond the capabilities of the average consumer to understand this legalise jargon. The banks and some insurance companies are also now following the lead of our politicians and issuing ‘amending terms’ which require you to sit for hours comparing documents and deciding what effect the simple change of one word has on a clause. Pure obfuscation.
  •  Complete dishonesty – No other way to put it – some companies simply lie or knowingly promise more than they can deliver.  Some examples: a mail order company advertises a product knowing full well that if they don’t get x number of orders they won’t either place an order for the goods from their supplier.  The airline tells passengers that the flight will depart in 30 minutes when in reality they simply don’t have any idea when the necessary parts to fix it will arrive.  The travel company offers flights toNew York “from £329” knowing they have no flights available at anywhere near this price.

Some companies have improved to the extent that they are shining examples.  After a recent visit to a Jaguar dealer I found a slight scratch on my car (it simply polished out, no harm done) when the customer feedback email arrived I mentioned the scratch.  Firstly, I got the service manager on the phone for half an hour, genuinely concerned, very interested in both my car and me.  I was quite satisfied with his apology but accepted the offer of a no-charge valet when next passing.  A few days later I received another call from ‘Jaguar’ extremely concerned and courteous, wanting to know if I was satisfied.  The matter of the scratch resolved, he passed on to seeking my opinions on the car and again we chatted for half an hour.  Being suspicious, I quizzed him as to where he really worked.  Not only did he convince me he actually worked for Jaguar’s design department but insisted I took his full name and phone number in case I ever needed assistance in future.

Eating my lunchtime sandwich one day, I took to reading the small print on the receipt I had received with a delivery from Lands’End (I really do get bored easily).  I discovered that they offered to repair any item of their clothing that might have become damaged – whatever the reason or age of the garment.  I sent back an old favourite casual shirt that had a torn seam and, sure enough, a week or so later, it came back completely repaired with a compliment slip.  A perfect generator of customer loyalty.

Do you recognise any of the above practices?  Do they happen in your company?  Or do you have any shining examples of companies that really set out to build customer loyalty?

An Underclass Foretold

Before the rioting and looting stops and the hand-wringing and political point scoring get out of control, I’d like to take you back to 26th November 1989. Whilst the Velvet Revolution was reaching its climax in Prague, that Sunday, an American academic, Charles Murray wrote an article for the Sunday Times magazine, entitled “Underclass”. Murray is now J. H. Brady Scholar at the American Enterprise Institute for Public Policy Research.  Yes, this is a right-wing think tank and Murray’s writing is often highly controversial (none more so than The Bell Curve) but, with a Bachelor’s in History from Harvard and a Doctorate in Political Science from MIT, he always brings a cogent and learned analysis to support any argument.

Image courtesy of TNT Magazine

With the concept of an American underclass already firmly established (though with causes hotly disputed) Murray was asked in 1989 to look at the UK to ascertain if the factors that he believed drove an underclass in the USA were present in the UK. Heading off early criticism, Murray started by defining an underclass; he was “not referring to poor people, but to a subset of poor people who chronically live off mainstream society (directly through welfare or indirectly through crime) without participating in it. They characteristically take jobs sporadically if at all, do not share the social burdens of the neighbourhoods in which they live, shirk the responsibilities of fatherhood and are indifferent (or often simply incompetent) mothers.

 Three Factors were held to be critical in terms of early warning signs of an impending problem.

1. Illegitimacy – but not simply babies born to unmarried mothers.  There were, as Murray was quick to point out, many children living in happy two parent marriages outside of marriage in addition to excellent single mothers (and single fathers) that may also have been divorced or widowed.  Murray pointed out that British births to unmarried mothers went from under 5% in the early 1950’s skyrocketing to over 25% by 1988.  However, the birth rate was not evenly distributed but heavily biased towards those areas with populations predominantly of the lowest social economic status group (V).  However, for areas such as Nottingham and Southwark this percentage was already over 40%.  This was not a randomly distributed trend but as Murray explained “With just two measures, the percentage of people in Class V and the percentage of people who are “economically inactive” the illegitimacy ratio in a community can usually be predicted within just three percentage points of the true number.”

2. Crime.  In Murray’s words “Crime is the next place to look for an underclass, for several reasons. First and most obviously, the habitual criminal is the classic member of an underclass, living off mainstream society by preying on it. Habitual criminals, however, are only part of the problem. Once again, the key issue is how a community functions, and crime can devastate a community in two especially important ways: first, to the extent that members of a community are victimized by crime, the community tends to become fragmented; second, to the extent that many people in a community engage in crime as a matter of course, the community’s socializing norms change, as different kinds of men are idolized by boys and the standards of morality in general collapse.”

Murray then proceeded to quote the crime statistics for England which demonstrated a level of violent crime throughout much of the 1950’s of below 30 incidents per 100,000 people rising by 1988 to 314 per 100,000.  These levels of violent crime are also highest in the areas where the highest numbers of those in social class V are to be found. Murray held that crime had become safer in Britain throughout the post-war period, and most dramatically safer since 1960 in respect of the chances of being caught,  being found guilty and of going to prison.  In Murray’s words “The landmark legislation was the Criminal Justice Act of 1967 implemented in 1968, which for the first time introduced parole to Britain, mandated suspension of all sentences of less than six months, and in a variety of other ways legislated the same philosophy of criminal justice  which for the first time introduced parole to Britain, mandated suspension of all sentences of less than six months, and in a variety of other ways legislated the philosophy of criminal justice–less use of prisons, less talk of just deserts, more therapy and  the advent of “minimal intervention.”  Talk of ‘Rights’ was beginning, too.

 3. Voluntary Unemployment.  I suspect that Murray was quite deliberate in his choice of words here; rather than referring just to unemployment, he was quite specifically identifying those who had chosen to exclude themselves from the workforce.  He pointed out that (in real terms) unemployment benefit had grown to a level that it was capable of funding an idle lifestyle (especially when combined with the cash economy and the proceeds of crime).  However, he also spelt out the difficulties that presented themselves when attempting to move from benefits into work.  Gone, too, were the attitudes of an older generation who would take a job that meant less money each week in preference to what they perceived as the stigma of the dole.

The combined effect of these three factors, Murray held, was driving the creation of an underclass just as they had in the USA. Before anyone rushes to the barricades shouting about the evils of Thatcherism, all of the above trends were firmly established before Margret Thatcher came to power. Murray was back writing in the Sunday Times once more,10 years later, spelling out the cold hard facts that clearly demonstrated that his predictions were being proved to be correct.

This is but a crude précis of Charles Murray’s article (all of which can be found at AEI) but can any of us seriously dispute the thrust of his analysis? We may dispute the causes of this situation and many will as the social sciences and criminology have largely become the preserve of a Liberal thinking establishment. Nevertheless, can you honestly deny either these facts or the difficulty of finding solutions that are not merely sticking plasters applied to the margins of the problem? Certainly, who can now doubt that the Metropolitan Police have gone from being ‘institutionally racist’ to being hamstrung with a deadly combination of political correctness and ‘health and safety’ induced inertia?

Charles Murray closed his article with a quotation written about Britain for a British audience: “There is no country in the world where so many provisions are established for the poor. So many hospitals to receive them when they are sick and lame founded and managed by voluntary charities:  so many almshouses for the aged of both sexes, together with a solemn law made by the rich to subject their estates to a heavy tax for the support of the poor.  In short, you offered a premium for the encouragement of idleness and you should not now wonder that it has had its effects in the increase of poverty.”

 This was Benjamin Franklin speaking in 1766.

And in case you wonder why I write about such matters on a business blog who can doubt the effects of these recent activities upon our economy and on the climate for starting, growing and maintaining a healthy business?

Do you have any answers as to how we treat this cancer in our society?



The business of morality

The current media hysteria over the News of the World, politicians and the Murdoch empire seems to crystallise around the subjects of morality and power.  What are politicians prepared to do to get and stay elected?  What are business people prepared to do to achieve power and success? These issues and the stories filling our media at present, voyeuristic as they are, bring some unpleasant memories flooding back.

Image courtesy of US Coast Guard

Now, if I’m brutally honest, I’m probably not the whitest soul on this earth but I rate my past transgressions as relatively minor and, as far as I know, ones that didn’t harm others.  In fact I like to think that I haven’t knowingly ever achieved something by consciously harming another (and note that I use these words not as a lawyer turned politician but as a layman).  Yes, I’ve known politicians, famous sporting heroes and ‘celebrities’ but perhaps I wasn’t sufficiently interested enough in them to create any leverage for myself. The tale I’m about to relate demonstrates (to me) the lengths a person will go to in pursuit of their own ends.

            Many years back I lost my first wife after a long and tragic illness that caused her great suffering and my family enormous grief.  This loss changed me forever in so many ways and so, some years later when I heard a colleague’s wife was suffering from the same cruel disease, I felt spontaneously driven to write to him.  I let him know of my concern for them both and offered an understanding ear if he ever felt the need to talk. Now at the time I was working for a major international corporation and my colleague (let’s call him Marcus) was both older and more senior than me.  Very shortly afterwards, I got a call from Marcus’s secretary to fix a date for us to have dinner on his forthcoming visit to theUK.

            We talked late into the night while Marcus poured out his soul to me and thanked me for my concern for them both.  It wasn’t long after that I heard the sad news that his wife had finally passed away.  I wrote again but it was some time before we met as I was running theUK operation while Marcus was one of the senior team based in our European headquarters.  A year or so later, I again received a call from Marcus’s secretary inviting me for dinner on his next visit.  Business concluded on the day of his visit, I drove Marcus to his hotel.  As the sun was shining brightly on that fine summer evening, we decided to take a walk along the river that ran by the country hotel I had chosen.  Once more Marcus talked; he talked of the pain of his wife’s suffering and death; he talked of the slow repair of his inner self and a returning belief in the joys of living.  And then he shared with me his love for a new woman in his life, how they met, what she meant to him and how they would spend their life together.  I was pleased for him.

            A year or so later I moved to our European headquarters in a senior staff role, one of the same team as Marcus and reporting directly to our president.  A week or so after I arrived, I was sitting in my office late one evening mulling over the situation I had encountered and, feeling more than a little lost; I was missing my old team and loyal support group.  Suddenly, my door burst open and Marcus charged in; with no pleasantries or even common courtesies, he launched into a vitriolic attack on me, my function and my new team.  Equally abruptly, he left and never again exchanged a friendly word with me.  I was mystified at the time because the substance of the attack was laughable and demonstrated a gross lack of understanding of the subject at issue.

            Getting immersed into my new role over the new few months, I was determined to analyse the underlying causes of the problem I had been given as a priority to solve in my new role.  The biggest assistance I received was, strangely enough, from the members of a team that reported to Marcus; they were bright, they were helpful and they were very frustrated that the extremely expensive IT investment in the system they ran was being ignored.  As I learnt more of the workings of the European operation it became clear that, under the bonus system that prevailed at the time for senior executives, Marcus would be gaining indirectly from the problems that existed (both financially and reputationally).  Putting right the causes of the problem I identified admittedly would have taken much effort and could have affected Marcus adversely in the short term but would have had an enormously beneficial financial effect upon the entire business. On the morning of the presentation of my findings to the entire European management group, Marcus decided (or conspired) to play golf with our president thereby ensuring they both missed my presentation.  The next day he issued an edict to his team that they were not to cooperate with me in any way.

            One man’s greed and ego had damaged an entire business; I could live with the effects upon me (as it led to my career taking a very positive turn as I shortly thereafter left corporate life) but I have often reflected how one man could be so duplicitous.  He could have worked with me and even taken the credit for the solution but no, he had to fight in the dirtiest manner to preserve the short-term status quo.  Businesses (and democracies) allow people in positions of power to exercise the most dubious ethics and morality and permit them to flourish.   Do you think this is correct?  Have you encountered problems such as these?

If you would like to find where you stand on a broad range of moral issues we face in our modern life, go to http://www.moralcompass.org/