Tag Archives: Recession

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

The Business of Life Chapter 25 – when it’s time to pick yourself up

The flight back from Geneva that evening gave me some time and space to get my thoughts together.  There was none of the rage I had felt when I had been fired from Akai 13 years previously.  Instead, what I felt was a mix of great relief and sadness.  The sense of relief had been something I expected, as working for Norman and Eddie would have filled me with horror.  This feeling was vindicated later that same year when a friendly head hunter shared his experience of dealing with Norman  But more of that in due course.

The sadness was an unexpected sensation.  I had spent all those years working for a company in roles that had provided me with enormous challenges, to which I had usually been able to rise.  The company had given me a superb business education, which I have since come to realise was peerless.  It had also provided me with rich and complex problems on which to apply my new found knowledge.  I still count some of the solutions I arrived at to be amongst the greatest successes of my career.  It was sad that middle management had not always been able to step back from their personal positions and embrace a new reality.  Strategic thinking had been subordinated to the protection of personal gain in many cases.  Nevertheless, I knew I was going to miss the company, the challenges it had provided and the people; even the ones who had frustrated the hell out of me.

One worry luckily I didn’t have was financial.  At least I was confident that I would find the next position before money became a problem.  With the savings I had accumulated and the severance pay I had received life wouldn’t be too bad.  I was under no illusions though as the UK was still recovering from a nasty recession.  For the moment I put that from my mind as I had more immediate matters to deal with.  I had an apartment in Geneva with more stuff accumulated over the previous year than would fit into a suitcase and I had to get it back home.  I made plans to drive over in a few days.  Speaking to a couple of my old team I discovered that they had already had a farewell lunch together but on hearing I was returning for a couple of days they decided to do it all over again – with me.

So, after a few days catching up on my sleep and delighting in being back home with Denise, I headed back over the Channel and through France to Geneva for the last time.  The lunch was bitter-sweet.  I was touched that they were all prepared to give up their time to meet with me once more.  It was apparent though that a number felt a lot less philosophical about the situation than me and it was clear that at least a couple were going to find it very tough to get another position as good as the one they had lost.  One saving grace for them was that Swiss welfare payments were a whole lot more generous than the UK but only for a time.  When the hugs and kisses were over we went our individual ways and I began the long drive back.

Back home in Yorkshire my first priority was to shake off the excesses of too many meals and probably too much to drink.  So, Tilly our Rottweiler joined me for long jogs across the moors around our home and gradually I began to feel good both physically and mentally.  Without a break I started work full time on the hunt for the next position.  In the following 6 months I travelled 20,000 miles attending interviews, networking and researching the market.  Contacts I had made were unstinting with their time and advice and the many head hunters I either approached afresh or renewed acquaintance with were generally extremely helpful.  Together with the advice I had previously received from Max, I was becoming more focussed and more professional in my approach.

Discussing the very exact profile a client had drawn up for a position I was reviewing with an extremely helpful recruitment consultant he suddenly enquired, “It was the same Norman that had run FKI that bought your old company, wasn’t it?”  When I nodded he went on, “God you had a lucky escape!  I had a brush with him a few years back.  He contacted me and said he was looking for half a dozen MDs.  Well”, he went on, “I thought Christmas had come early, so I asked Norman to let me have candidate profiles and I’d get back to him with a plan and an invoice for the amount we charge upfront.”  It seems Norman had responded, “Don’t waste my time with stuff like that, just get me the candidates and I’ll see if I like any of them.”

Things were certainly a lot tougher than they had been the last time I was ‘between positions’.  I was that much older, that much more senior and the number of openings higher up the greasy pole were that much fewer.  It became clear quite quickly that, despite my extensive contacts, I wasn’t going to walk into a senior role in the industry I had just left.  I think I was known as someone with strong views and a different perspective on things and that didn’t appeal to many.  In any case longevity in position was a hallmark of the industry I had been in and there was no game of musical chairs to join in.  Moving industries once again looked the most likely route back into gainful employment.  This bothered me not one jot as I had already worked in 6 diverse sectors and had found problems were invariably generic.

Drawing on the experiences I had accrued in my role in Geneva I reflected on the behavioural skill set that my role had really needed.  When I compared this with the psychometric feedback I had received over the previous few years, I realised that I had really been a square peg trying to fit a round whole.  Whilst the experience and knowledge I possessed had been more than sufficient for the role, my behavioural profile lacked the key political skills required.  I had the influencing skill alright but I clearly lacked what Phil Thurston at Harvard had referred to as ‘rat like cunning’.  My first approach to a problem or resistance was usually to summon the power of logic and rationality.  If that didn’t work I rarely shied away from a full blown, full frontal attack.  I could build and receive the loyalty and support of a team, I could understand the biggest of pictures and what was required to solve the underlying problems.  Yes, there was much I could learn of politics but, as I saw things, I was far more suited to leading than being led.

But my mind was beginning to move in a different direction.  During the final months in Geneva I had started to think of working alone as a consultant and had sounded out a few people I knew who had created successful careers in this way.  The advice had been to specialise rather than risk being known as a jack of all trades.  The obvious specialism was marketing strategy and I was pondering the prospect of setting up and promoting my own business when, in one of those amazingly serendipitous moments, my phone rang.

The call was from Gerard, the finance director of an old customer I had known for many years whilst with SylvaniaUK.  He explained that they had a problem he felt I might be able to assist with.  Was I interested in meeting to discuss the situation?  A few days later I travelled down to Croydon to meet Gerard and Steve, the MD of Jerrard Bros PLC.  The company had been founded by Steve’s father and uncle, had done well for many years but now required a new supplier of a key product.  Would I help them?  I said I would let them have a proposal.  During the visit it became clear that the company had reached a plateau over the previous few years and I probed for reasons.  I said I would also let them have some thoughts on working with them to address this issue also.  A couple of weeks later and after some good natured negotiation we had a business relationship based on two projects.

Almost straightaway I received two more approaches for significant projects and following discussions, proposals and more negotiations I found myself engaged to complete both.  One was a feasibility study for a foreign manufacturer looking to enter the UK market and the other was assisting a company looking to acquire one of my old, major competitors.  Very quickly I became extremely busy and drew a halt to any idea of seeking a new employed role.  I revelled in the freedom of working on projects that interested me at my own pace (although to agreed deadlines).   By now it was summer and I fell into a routine that, when I wasn’t travelling, I often cycled long distances in the Dales.  I would start early and return by midday and then work through until mid evening.  I had always found cycling conducive to thought and now I could actually keep fit whilst doing something I really enjoyed and apply my mind to various problems at the same time.

During my job hunting process I had followed a highly targeted approach seeking opportunities that had not even been advertised.  Each day I would scour the business press looking for news items concerning major companies that were either contemplating or had made major investments or acquisitions.  Whenever I came across a situation where I felt I could add value I would write to the chairman or chief executive (often to their home address so my letter wouldn’t be screened by a secretary).  I would either compliment them on their success or wish them luck with their plans and then spell a short but precisely targeted couple of sentences laying out how my experience could assist.  I would follow these letters up with a call aiming to achieve a meeting.  Several of these approaches got me in front of senior people.  I hadn’t succeeded in getting a new job from this approach but I decided I could use the experience to win new clients.

Another opportunity for creativity had arisen when I lost out after being down to the final two for a position running a national chain of builders’ merchants.  Having invested the time to carry out a great deal of background research on the firm and its competitors I thought it would be foolish to waste it.  I called the new MD, introduced myself as the guy who came second, congratulated him and suggested we meet as I had a proposition.  He was sufficiently intrigued to agree to meet me.  When we met I made the suggestion that as he was busy getting to grips with a big new role there was a way I could help.  He listened very carefully to what I had to say about the industry, the position of his company and the issues I had identified.  He considered for what seemed an age and then said he would be pleased to receive a proposal.  I went away and submitted a detailed proposal for a very focussed consultancy project.  He accepted but not before something else got in the way.

Towards the end of my period of applying for jobs I met a head hunter with whom I had established a good relationship.  Out of the blue he called me months later to say he had an assignment he felt was well suited to my experience.  We met and I listened to the facts he laid before me.  His client was Ross Group a small UK PLC with a number of businesses in electrical products.  They were seeking an MD for one of the group companies, Selmar Industries, itself a group of three businesses manufacturing in West Yorkshire.  The previous MD had departed after running up losses of £3.0m.  Smelling a dead horse, I declined to take matters further.  However, a couple of weeks later he was back on the phone pushing me to meet the Group MD at the company’s factory, “It’s just down the road from you, I’m sure you’ll get on famously with Neil and if you still decide it’s till not for you, well fine.”

The following week I duly arrived at Selmar’s factory, which was housed in old mill premises in a tight, wooded valley on the outskirts of Brighouse.  My heart sank; it looked a tip.  However, my head hunter chum was right about Neil with whom I quickly established a rapport.  He had also worked in major corporations and there was a basic understanding between us over how businesses should be run.  Nevertheless, after several hours of discussions I politely declined to take matters any further.  A week later Neil came on the phone to chat and pressed me to meet the chairman, “Nothing to lose, see what he has to say, eh?”  A long trip down to Basingstoke the following week produced a firm offer, which I rejected.  They responded with an improvement and promises.  By this stage, I have to admit, it had become something of a game, so I pushed on and won more concessions.  Finally I accepted but not before I had negotiated approval to continue my work with Jerrard Bros.

I was back running a group of businesses and was confident that I could improve them.  Would it work out?  Or had my pugnacious nature set me up for trouble again?

 Image courtesy of Eliasbadi.com

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 15 – unemployed & on the hunt)

Back in Henley and unemployed I set about the process of getting organised for the job hunt.  My office was sorely in need of some love and attention and the first task was to have a tidying up blitz and reorganisation.  This accomplished, I had an orderly space to think and work.   Reviewing the experience I had under my belt and the skills I had acquired along the way, it seemed to me that I could move industries.  My self confidence being what it was I had never expended much time on using contacts (the phrase networking had yet to assume an audience if it existed then).  So, the Times, the Telegraph and the FT were scoured on a daily basis and applications sent off.  In the age prior to the PC it wasn’t easy to vary one’s CV but I made up for that with hand-written covering letters that were individual to each application.  My approaches varied a great deal and even included a lively personal recording made on tape for the position of MD for a regional radio station; it won me an interview but I failed to make it to the shortlist.

The records I kept at that time show I applied for 79 roles at or one level below the board across a very wide variety of industries.  Very few of these application were to companies in sectors I had previously worked in.  Of the 32 initial interviews I succeeded in obtaining, sectors included finance, medical, training, data management, truck hire, communications, incentives, consumer goods, wood products and many more.  These initial interviews led to 13 second, 5 third and one fourth round meeting and three offers.  Of the rejections I received only a small number of companies or consultants were good enough to provide a reason and these included; no foreign languages, no local authority experience and no MBA qualification.

Looking back at the names of the executive recruitment firms and companies I applied to, the vast majority only ever sent a very cursory rejection and many not at all.  Given the seniority of the posts being filled it seemed to me to be incredibly short-sighted of the recruitment consultants and head-hunters not to have been more engaged with their candidates.  I vowed I would never use any of the people or firms that treated me in this way when I returned to the world of work and I never have.  If they were foolish enough not to realise that today’s candidate is tomorrow’s potential client, then they would do without the very large sums I would spend on recruitment projects over the subsequent years.  Busy or not, they were simply foolish, short-sighted and just plain ignorant people (some of which I had the pleasure in giving personal rejections to when they came touting for business in later years).

Yes, there were frustrations along the way but every application, every interview and every rejection provided a learning experience for me.   Some of the interviews served to shed light on aspects that I ought to emphasise or downplay.  Some interviews were bizarre. One such occasion I remember well; arriving early (something I always tried to do) I was greeted by the consultant who welcomed me warmly and proudly handed over the last three years sets of company accounts for me “to learn about his client”.  Skipping the glossy bits I went straight for the numbers and it was clear that this “highly successful” business was on a downward slope of around 45º!  It had gone into the red, margins were declining, was consuming cash at an alarming rate and had only survived by wringing its creditors dry.  “Well, what do you think, eh?” enquired the inanely grinning consultant as he ushered me into his plush office, “Great opportunity or what?”  I explained that the client was technically insolvent and couldn’t last another 6~9 months unless a miracle occurred.  Given that the industry never made great profits, the business had no clear strategic advantages and no miracle was announced to me, I declined in the politest terms I could muster and made my exit.  Surprisingly, I got a call a week or so later saying I really ought to meet his client before making any final decision.

The concept of psychometrics was not well established at this time and I had never come across such a process before. Only a very small number of firms I met used such testing.  The first was a Swedish company who met with me in a Heathrow hotel.  A very studious, sombre and suspicious looking individual informed me I would first complete his “test”.  I duly did as requested and when finished, the sombre one took it from me with an aloof air and disappeared off into a far corner of the large room to score it.  The second rather more human individual started the interview off with a number of quick fire questions that seemed to have no continuity about them.  A little time later the sombre one reappeared from his corner, his expression as cold as a Swedish winter, announcing, “You are responsibility adverse!”  Somewhat taken aback, I countered as best I could with a response covering the depth and breath of responsibilities I had held and how I rose to the challenges.  “No!” came back the icy blast, “The test is saying this fact and the test cannot be wrong!”  The Swedes decided there and then that there was no place in their organisation for a risk adverse executive.

My other encounter with a questionnaire based psychometric test was at the offices of a major recruitment consultancy where I was asked to work my way through a long questionnaire comprising of a choice between pairs of phrases as to which was more like me.  A standard technique in many psychometric tests (I subsequently learnt), this process can be rather frustrating to the candidate as items keep cropping up paired against a different choice.  Certainly I found this approach entirely frustrating and I was continually going back and changing previous answers when I came across the pairing between “I love ice cream” and “I hate my mother.”  Not exactly having a love of the former, I felt couldn’t make a sensible choice, gave up trying and got no further on that assignment.  Despite acquiring qualifications in many psychometric instruments over the subsequent years, I have never come across this particular instrument again.

Graphology is extensively relied upon in France for recruitment purposes and I had my first encounter during this time.  Applying for a position with a Belgian company, I was interested to note that the advertisement stated that the covering letter had to be in the applicants own handwriting.  I duly complied (as it was what I was doing anyway), sent off my application and was pleased to receive an air ticket the following week for an appointment in Brussels.  As soon as I was introduced to the chief executive he stared intensely at me for a short while as he shook my hand and announced, “I simply had to meet the man who owns this handwriting!”  He never elucidated despite the meeting lasting several hours and I didn’t get through to the next stage.   Many years later I had my handwriting analysed purely for professional interest and was intrigued to see many facets of my character accurately picked out.  Unfortunately, there were also an equal number of behavioural traits claimed for me that were utterly wrong!

At the beginning of October of that year I applied for the role of marketing manager with the UK arm of aUS corporation. Most of the roles I had applied for were above this level but it was a lean week for advertised positions and a combination of characteristics led me to apply.  The company was in an industry I had never worked in before (industrial lighting), it was a small part of a huge corporation (GTE now Verizon following a merger with Bell Telephone) and it inferred significant growth potential. Still wearing my hair shirt from the glamorous, highly spending days of consumer electronics, the role probably met a subconscious desire for atonement.  The consultant advertising the role was one I had never come across previously and in the first meeting we had he grilled me hard but listened acutely to my responses.  It was akin to a tough squash match against an opponent just that bit better.  What I learnt that day made me very interested; the company was a major US & global player in its sector, relatively new to the UK,  had manufacturing here, was currently building a vast new factory and was looking for someone to replace the MD over the next couple of years.

In the next month I had two more interviews in the shabbyWest Yorkshire offices with the European and the UK HR directors plus the MD.  Despite the old offices (they clearly didn’t waste money) I liked even more of what I heard.  The business had started well but had reached a plateau and they wanted someone who could create a new marketing strategy and build theUK brand.  The new factory was indeed vast, with spacious offices and, yes, the MD was singled out for a wider European role over the next few years.  Knowing I would have to leave my beloved Henley onThames, I took the opportunity on the second visit to look around the area and fell in love with Wharfedale.

Several days later I got a call asking if I would fly to Geneva to meet with the European Marketing VP (Louis) and the UK MD (John).  An early flight got me intoGeneva for lunch in a luxurious hotel overlooking the lake and Le Jet d’Eau.  I don’t think I ate more than a mouthful as it seemed like the questions were designed to come at me just as my fork was on its way to my mouth.   I was grilled again for several hours before we decamped to the office the other side of the lake where the negotiations began. They wanted me and by this stage I definitely wanted to join.  When I got on the flight back to Heathrow that evening I had an offer in my pocket to join Sylvania Lighting that I was pleased with.  The downsides were that I had to move the family toYorkshire, my new boss was a curious individual and I had zero experience of industrial marketing.

Was this the best move for me?  Would it work out?

Image courtesy of Farm4.Static

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

 

The business of life (chapter 11 – what goes up..)

Back as a hero from Japan, waving my bit of paper committing to contract renewal, I felt somewhat like Neville Chamberlain promising ‘peace in our time’.  My first action was to debrief Gordon on the exact details of the trip and the letter of intent and make the necessary changes to the operating budget. The flush of success soon wore off (I think it took place some time that same afternoon).  I then sat down with the team to plan out the detailed marketing plan to ensure we achieved the revised targets that I had agreed to back in Tokyo.  We had a mountain to climb.  However, I’d found that I rather liked challenges.

The Akai Golf

As our new brand widening advertising campaign got underway, one of the unwelcome effects was that all manner of ‘unmissable opportunities’ started crawling out of the woodwork.  Most of these were not worth the time spent reading them, but then one of those serendipitous events occurred.  I received a letter from Richard Lloyd  (of GTI Engineering) seeking sponsorship for the forthcoming British Saloon Car Championship.  What caught my eye and set his approach apart from many others, was artwork of his Golf GTI in our brand livery.  We met, got on famously and I agreed to a package of sponsorship for the year, with an option on the next. I had the artwork for the car reworked, wheedled a road going version from VW that I had resprayed into a replica to use for dealer events and then bought a double decker bus (a Bristol FLF for anyone interested).  I had the bus converted into a hospitality suite, also repainted in the team livery.  We then set about using the races for dealer hospitality, something that became hugely popular, especially as Richard won time and again. Sponsorship became a core element within our communications mix, offering a high technology, exciting and success driven image that resonated with our target market.

 The team I had inherited came up with a variety of ideas for boosting sales and, following a review of these together, we decided that one had real potential to fit with the exciting image we were creating and to boost sales.  That year the Akai Awards were born.  Hammed up beyond belief, we announced to our dealers that they could nominate themselves to win a ‘coveted’ Akai Award for success in promoting the brand and growing sales.  Following a long weekend of exhausting investigation of venues around Europe (in the welcome company of my wife) I chose The Trianon Palace atVersailles and engaged the services of Michael Parkinson as host.  The event later that year was a runaway success.

The most critical new product introduction from Akai that year was the new VHS video recorder.  Head to head with competition from the other brands in the VHS technology camp (especially JVC) it was an all out systems battle with the Sony Betamax system. Against the odds, Akai was the first brand of VHS recorder onto the UK market (and ahead of Sony & JVC) with a batch of just 50 machines air freighted in.  These machines had a recommended retail price of £799 but even while the first batch was still in transit (and with no firm date for the next), retailers were advertising a price cut to £750. Despite a severe supply restriction from all manufacturers in that first year, the price continued to fall.

An interesting endeavour took place whilst I awaited the first VHS deliveries.  We had left in stock quite a large number of an earlier portable black and white quarter inch video system (the VT100).  Never much of a seller and now completely obsolete, these were something I had inherited and they now needed to be cleared prior to our VHS launch.  Thinking of ways to clear the stock (none of our retailers would touch them) I hit upon an idea. My father in law had been struggling to get me to understand what needed to be done to improve my golf swing (my failure not his).  I realised that if I could see what I was doing it would be so much easier to understand.  Back in the office I set about recruiting a temporary sales team to sell these systems into golf professionals.  We succeeded in clearing the stock but it was an uphill struggle to get these ‘professionals’ to envisage the potential of what we were offering!  The joke about the machine gun salesman getting turned away at the battle of Hastings came to mind.

As that first year progressed and sales climbed, research was showing that our brand awareness was rising and that of our competitors was falling.  We repeated the research on a regular basis and monitored consumer purchases via an omnibus survey of household buying by brand. It seemed that the battle for brand awareness was very much a zero sum game.  Using this detailed information I was able to determine which elements of our marketing mix were having the greatest effect on consumer purchases.  It was therefore possible to fine tune our spend in the most cost effective way.  Unfortunately, this knowledge couldn’t save me in a future battle that was looming.

A change that occurred that first year was David’s departure and replacement by Gerry.  A very different man to David, he exuded charm and bonhomie, but soon demonstrated a severe lack of marketing judgement or expertise.  Bounding into my office one Monday morning shortly afterwards, he announced that he had had a simply great idea for a completely new advertising campaign.  “Picture it,” he gushed (complete with a wide ranging variety of hand gestures), “a nude draped over the bonnet of a red Ferrari hugging an Akai product that doesn’t quite cover everything.”  “Great idea.” I responded, trying to muster enthusiasm, “Why don’t you join me at the advertising agency next time we’re having a brain-storming session and pitch it?”  Oh, shit, I thought.

My trips to Tokyo became fairly regular events.  Whilst these visits had been mentally exhausting over the winter, as the months turned to spring and early summer they became physical agony.  As the world was still suffering an energy crisis, Akai had decided that the air conditioning would only be switched on in July and August.  Sitting on the plastic covered chairs in a pool of sweat in one of the windowless meeting rooms, during an unseasonal heat wave in early summer, Andy and I were soon afflicted by a medical condition colloquially known as ‘baboon bum’.  Sweating and fidgeting away we decided that we needed ‘rest and recuperation’ to ensure our fitness before we returned to the office.  The advantage of crossing the international date line on the return leg was that of gaining a day.  Why not take advantage of this?  A call to rearrange our flights saw us that Friday evening jetting off to Hawaii rather than Anchorage.  If you’ve never done it, arriving at 6.00 am (after a seven hour flight) on the morning of the same day you departed at 6.00pm, takes a little adjusting to.  Friday was largely lost in a jet lagged haze but we did manage a few visits the next day and decided that the (then) Kahala Hilton atDiamond Head would make a fine venue for the next year’s Akai Awards. It took a subsequent visit a few month’s later just to ensure that we had made the correct decision.

Back in London the visit of the Akai Company President finally took place (having been continually delayed), resulting in a significant shock.  There was to be no contract renewal despite our raising sales by 50% in under two years to a new high of £6m.  Instead, it was announced that Akai was to form its own company that same year (1979).  I was involved in no further discussions and the President and his entourage moved on.  RAV promptly served redundancy notices on me and my entire team.  The personnel director assured me that he would let me know if any other roles became available within the group. Gordon was nowhere to be found.

Did my success count for nothing? Had my spell of success run its course?  With the trade unions wreaking havoc upon the economy, the three-day week, Britain being laughingly referred to as the sick man of Europe and with unemployment raging, the outlook seemed far from benign.  What followed over the next couple of years was to reveal aspects of my make-up that would cause me to question my abilities and the wisdom of meeting opposition head on

Image courtesy of Forzamotorsport.net

The business of life (chapter 8 – a business to run)

Driving across London for my meeting with Peter and Angus the next day I reflected on the growing sense of dissatisfaction I was experiencing with my current role. I was by then earning a great deal of money.  I had flourished through the recessions of the early and mid-seventies (induced by miners strikes, 3 day weeks and Arab oil embargoes), had moved into our first house the year before and we were enjoying regular family holidays.  The problem was it wasn’t enough; not the money nor the standard of living.  The real issue, I realised, was that I was just frustrated with my role.  I loved the negotiations that came with the big deals but the day to day role simply bored me.

By this time I had been selling successfully for over 8 years in two demanding companies and had graduated to the most important customers. But it simply wasn’t enough; I wanted more responsibility, a wider role and greater autonomy.  A few short hours later I had all of those things.

Unbeknown to me, Angus and Peter had been engaged in negotiations with a Japanese manufacturer of cine cameras and projectors.  The new brand Sankyo was potentially a wonderful fit into RAV’s consumer brand portfolio as we had no presence in this sector.  A powerful additional benefit to the Sankyo brand was their forthcoming entry into the market with a first generation sound cine camera.  The negotiations had been concluded, apart from their agreement to whoever RAV chose to head up the new venture.

When I drove away from the office later that afternoon I had the role of Business Manager for Sankyo and full profit and loss responsibility for the new business.  The downsides were that I had to rely on sharing the services of my old colleagues as a sales force, I had taken a pay cut and would have to keep the car I was currently assigned.  The sales team issue was a temporary one, my car was still fine and I had negotiated a basic salary that was 50% up.  However, I was going to be one third down on a monthly basis earnings basis for the first year when I would become eligible for a generous bonus scheme if I exceeded sales and profit targets. But I was also now on the company executive contract with the additional security that provided.  A few days later I met with the chairman of the Sankyo business and his team responsible forEurope and the deal was signed.

The company also agreed to fund a move to ease my commute and later that year we became residents of Henley on Thames, a delightful location (and one now full of wonderful memories).

One of the first meetings I had upon taking up my new role was with Martin, the finance director.  I had been required to construct a one year budget for our new business including my first attempt at a cashflow projection.  Not to put too fine a point upon it, I was taken ‘back to school’ for about an hour and then informed I was booked on a “Finance for the non-financial manager” course.  I learnt quickly and it established my enduring commitment to the critical task of managing cash in a business.  I might have had the financial backing of a major PLC but God help me if the subsequent result was more than a few percent out from my monthly cash forecast.  Cutting back on forecast purchases from Japan, if I had failed to achieve my sales budget, also brought the wrath of the Japanese gods down on my head. One learnt quickly that honesty and accuracy were far more important than over optimism or chancing to luck.

Having ensured that the sales team was trained in my new products and the press was briefed, the trade launch took place.  Luckily for me the products were well received and orders flowed.  However, a few months after launch sales started to fall short of projections.  Two problems were responsible for the slowdown; the first taught me a lot about the challenges of adding a product range to an existing sales team and expecting synergy to take over.  My erstwhile colleagues had existing product sales targets to achieve as did my two fellow business managers (John & Doug) responsible for Pentax & Mamiya.  Gradually, by a process of discussion and collaboration, we managed to stagger promotional activity and product launches and sales started to climb once more.

The second problem was more deep rooted but, once identified, the solution became one of the most important factors behind the brand’s subsequent success.  In my previous role I had learnt to understand the purchasing behaviour and product use of the typical still camera owner.  In common with everyone else in the retail photographic sector, I believed that cine camera owners had similar needs and behaved in a similar fashion.  In an effort to understand more about the market I commissioned research into cine users’ beliefs, behaviours and perceptions of the major brands.  When the results were presented, I was amazed to find that the average owner was almost completely disinterested in the technicalities of the equipment; they saw little difference between major brands and merely wanted something that was easy to operate and would perform reliably.  Yes, there was a technology aware group of enthusiasts but they were a minute percentage of the market.

The implications of the research were immediately apparent; manufacturers and retailers were stressing the wrong aspects of the equipment both in advertising and instore.  There was much evidence in the research findings that many purchasers were alienated with a retail sector they believed talked down to them in terms they couldn’t understand.  The typical cine purchaser was scared off by sales pitches that dwelt on the technical aspects of the equipment.

Armed with this unique knowledge, I implemented two new strategies.  The first was to sit down with the advertising agency and spell out a new communications strategy.  The new top of the range models we positioned as aspirational objects (one of which you can see above, courtesy of an eBay vendor).  For the volume selling lines we took care to explain the benefits that came with new features rather than the universal assumption that everyone knew what these benefits were.  The other new approach I developed was a training module designed to teach our retailers a more congenial and benefits focussed approach.  I took to the road to deliver this training programme to as many of our stockists as I could reach.  The new approach was a success and sales started to climb.

Life was now anything but boring but in the first six months I found I had gained half a stone in weight.  My energetic regime in sales was now but a memory and the long ‘business’ lunch was fast becoming a regular pastime.  Yes, I was still selling my socks off but these negotiations more usually now took place around the table in some suitably upmarket restaurant.  Shocked at my rapidly thickening girth I joined the local Henley rowing club and soon became addicted.  For those interested in the sport, no I never achieved greatness, but spent whatever hours I could free up on the river with a fellow fanatic in a coxless pair.  Happy days, whatever the weather, and the start of a fitness habit that has stayed with me to this day.

Life in our large open plan office was usually full of fun (and intrigue).  Doug and John were now my fellow business managers and we enjoyed a great deal of camaraderie. However, with John (sadly deceased at far too early an age) there was always a competitive edge that was exacerbated by his overly suspicious nature.  Our two heavenly secretaries, Sue and Linda, managed to lighten the atmosphere and both took delight in chiding and teasing John whenever the opportunity presented itself. I had confided in Sue the reason for my absence from the office for a couple of days which happened to be due to a minor operation that would ensure my days of procreation were over.  As soon as I returned to the office John became solicitous in an extreme towards me and I realised that Sue had been a little indiscreet (she just gave me her usual sweet smile when questioned).  It became progressively clear from John’s ever more pointed probing that, not understanding the procedure, he had assumed that I had been completely emasculated.  It wasn’t until several years later, enjoying a drink with Sue at a company function that she revealed the truth.  It seems that the day after my ‘procedure’ she had brought a small medical container into the office containing two pickled walnuts swimming in surgical fluid, which she proudly assured John I had given her as a souvenir!  John had truly believed that this was what my little procedure had entailed.

Towards the end of my first year in the role, I had my first visit to Japan, taking part in a multi brand press trip.  Up until this point I had been liaising with Sankyo with regular trips to their European headquarters in Düsseldorf.  It had been decided to steal a march on competition with a fact-finding press trip to a country that was still relatively unvisited fromEurope.  All of the major factories of our various partners were visited with a good deal of time for sightseeing and ‘rest and relaxation’ built in.  Once I had acquired a taste for sake, raw fish and Ryokan, I came to love the country, returning many times in the next 5 years.  With the excuses of further press trips, dealer visits and sales team incentives, I also managed to visit many of the traditional tourist sights. I also loved the hot spring resorts, the mountains, the temples and how even the smallest patch of garden was turned into a haven of peace and tranquillity.  I was highly impressed with the speed and sheer efficiency of the Shinkansen and particularly the Japanese methods of manufacturing and the care they had for their workers.   Business was something else though and gruelling in the extreme (more of this in subsequent chapters).

I exceeded budget that first year, reaching a level that now justified my own team.  My budget for the next year proposed a sales team of 6, together with a product manager and a secretary of my own (the lovely Sue being stolen away for the exclusive use of John).  Having seen how a good grounding in sales technique was more important than knowledge of the sector, I recruited exclusively from outside the industry.  With Laurie the Product Manager and Bernadette (from Grenada) our new secretary, my team was now complete.  Looking back my leadership style at the outset was one of working with people to achieve agreed results and this approach has stayed with me (although I have no hesitation of ‘letting go’ non-performers).  If I’m honest, though, I probably erred too far towards letting my hair down with the team on evenings before sales meetings and on trips.  I was always the first up in the morning and very intolerant of lateness or lack of serious intent with the business of the day.

We worked hard and we played hard and soon, in 1976, sales were at a running rate of well over £1m and growing healthily.  The new sound cine equipment was selling well, aided by our advertising campaign and good product performance.  In their first year my new team did well and together we beat budget; I was back earning serious money once more. Peter was delighted at the results, as was Angus and the Sankyo people back inJapan.  I also stuck close to the media and sponsored the annual amateur film competition run by a leading magazine.  The only downside of this sponsorship was having to take part in the judging, which involved sitting through hour after hour of the most turgid, amateur efforts.  The relief at finding one film that stood head and shoulders above the rest was palpable.

Shortly after my second year end I walked into the office one afternoon following a customer visit to find Bernadette looking as if the world was about to end.  “Quick,” she breathed in her uniquely husky Caribbean accent “Gordon’s been on the phone several times; he wants to see you now.”  Gordon our divisional MD (and Angus’s boss) was not someone I knew well (in fact I was not aware he even knew I existed).  A 6′ 7″ Scot, with a formidable track record, Gordon towered over the majority (literally and figuratively), inhabiting a suite of offices on the floor above and rarely venturing down into our area.  When I arrived in his secretary’s office, Gordon was on the phone and I had to sit waiting for what seemed an age, consumed with curiosity as to the reason behind my summons; I had done everything asked of me, hadn’t I?

Finally ushered into his corner office, I was directed to one of the armchairs that surrounded the coffee table, where I was joined by a jovial Gordon.  “You’ve been doing well,” he announced and before I could respond continued, “I’ve got a wee problem and I think you can help.” Trying to remain relaxed I muttered something about doing whatever I could.  The story then unfolded.  Akai HiFi was one of the largest of the Japanese brands in the RAV stable, was the first and had originally been won and run by Gordon.  “We’re in trouble,” he went on, “The sales have been flat at £4m for the last two years, the contract is due for renewal in a year and the Japanese have threatened to fire us. How would you like to take the business on and win another contract renewal?”

I had really enjoyed my time running Sankyo, having my own team and getting results.  For the first time in a long time I wasn’t even bored.  And now here was a monster challenge being dumped in my lap.  Did I want it?  Could I turn Akai around? Would it be a good move?

I said yes.  What followed were some of the most invaluable experiences and greatest successes of my early career.  Unfortunately, the next few years were also responsible for almost ruining my career, my health and my marriage.

The business of life (chapter 6 – in which I discover riches are not everything )

The company I joined in late 1972 was Rank Audio Visual (a division of The Rank Organisation) based in an imposing, 1930’s style building on the Great West Road in Brentford,West London.  The products marketed by RAV included those manufactured in the UK (such as Aldis, Leak & Wharfedale) together with many of the premier Japanese and European brands (Nikon, Arriflex, Bauer, Akai, Pentax & Mamiya).   The team I joined was responsible for the sale of Pentax, Mamiya, Aldis & Bauer consumer, professional & educational products).

As a small team of six sales managers we covered the UK. My own geographic horizons broadened in that I was now responsible for more than half of the capital plus all of Essex,Kent, Surrey andSussex.  Apart from my new boss David, theUK sales manager, I was the only one of the team who had not previously worked ‘man and boy’ in the photographic business and, as such was treated with a mixture of caution or distain.

Following a product introduction day spent with the two product managers, I was despatched to spend a few days ‘on the road’ with my fellow sales managers.  Having come from a highly structured and disciplined company with rigid call patterns and performance ratios, I was amazed at how relaxed the new business was.  It was clear that my new colleagues were coasting, they were old hands who did just enough to make target (usually with a great deal of  game playing) and who were never on territory before 10.00am and rarely, if ever, after 3.00pm.  Now, despite being someone who had had more than his fair share of afternoons off in the past, it had always been because I had finished that day’s workload and there was little or no way one could earn any additional money. The money I could earn now was limitless and I was certainly going to make the best use of every waking hour.

Here I was with a completely open-ended commission scheme meaning the more I sold the greater my earnings; I was going to sell the maximum I possibly could and reap the financial rewards.  This attitude quickly brought me into conflict with my new colleagues who attempted to instil in me (by fair means or foul) their own values and working practices.  I made it clear that I was going to do whatever it took to be successful.  Over and above the potential for earning, I was now ambitious and I had my sights set clearly on David’s job; he clearly had potential therefore, I reasoned to myself, there would be an opportunity sooner or later. The business was certainly more exotic than the one I had left.  One of the annual highlights was the unveiling of the Pentax Calendar shot by Sam Haskins one of the great glamour photographers of the 60’s & 70’s.  I was constantly befriended by those who clamoured after each year’s new edition.

From the outset my new role was wonderful, the freedom was stimulating, travelling the English countryside in a smart new car (still at far too high an average speed) was refreshing and the selling task was enjoyable.  I had taken over from an old hand who had neglected vast swathes of the market. My advanced level of training had prepared me well enough for the task and the environment was challenging but responsive.  The retail environment I had entered was split into two main factions. There were those that were still attempting to cling to manufacturers’ recommended pricing and a traditional way of retailing on the one hand and, on the other, the new volume driven entrants who created a cost base that enabled them to exist on extremely slender margins (usually via mail order).  I managed to make real progress with both groups.  With the volume operators it was a question of staying close, negotiating well and constructing pricing models that fed the volume needs of both us and them.  With the traditional outlets I spent time on a selection who I felt offered the right geographic coverage and who were receptive to the patient and reasoned sales methodology I put to them (concentrating on lines that the mail order outlets didn’t favour).

Getting past my lack of trade experience was never a problem but it did produce some hilarious moments.  I had one East End Jewish retailer called Ken who enjoyed a formidable reputation.  On my first visit I waited patiently for him to finish with a customer and was greeted with a scowling, “Who are you?”  I politely explained who I was and was peered at closely. “What were you doing before you joined RAV?” he barked.  Sensing a challenge was on the way I decided a truthful response was in order and replied that I had been a margarine salesman. Ken’s eyes narrowed.  “Do you speak French?” “Un peu”, came back my cocky reply.  “Good”, growled Ken, “then you’ll understand F*ck off!”  I grinned and stood my ground.  “OK, smart*rse,” he responded, “explain reciprocity failure to me.”  I did in very succinct terms, grinning all the while. He caved in and we did business.

At the end of my first year the money I took home came out at more than double my basic salary and I was even more confident that I could do better.  One of my largest accounts was a national retailer called Derek Gardner, run by him of the same name.  Initially a very intimidating man, who had been extremely difficult to meet, we built a good relationship and business flowed.  Derek was a very disciplined man whose office was always impeccable and without a single piece of paper on display anywhere; in fact the whole office, nicely furnished as it was, was completely devoid of anything of character.  One summer morning I arrived at his office mid-morning for an appointment.  Derek greeted me in his usual reserved but polite enough manner but after five minutes or so I could tell his attention was elsewhere.  “Do you fancy a game of football?” he chipped in halfway through an attempt on my part to engage him on the business of the day. “Come on”, he continued, not waiting for my reply, “We’ll go to my house.”

Derek’s house transpired to be larger than I had ever been in before and set in beautiful Surrey countryside.  The sun shone and for half an hour or so we kicked a football around a section of his enormous grounds.  When he had had enough we sat and chatted.  It wasn’t long before the chat turned into a very serious discussion over a proposition I put to him to launch a major national promotion on Pentax cameras.  We got as far as I could go before I realised that I was, as the saying goes, out of my pay grade.  I made a suitable excuse of checking supply with Japan prior to committing on the details of price and promotional support.  The potential we had discussed was simply huge, greater than my entire budget for the brand that year.  Fast driving got me back to head office that same afternoon and deep in discussion with David’s boss, Peter.  We agreed that if the necessary level of additional support fromTokyo could be obtained, there was the makings of a deal I could go back with.

With a new price agreement in place from the Japanese, I made another appointment with Derek to thrash out what we both envisaged to be minor details.  The evening before my meeting Peter called to say that he couldn’t be with me but his boss, Angus (the divisional director) would be accompanying me.  I had no problem with Angus as I had always had a good enough relationship with him.  However, from the outset it became clear that there was a significant clash brewing between the two of them.  Derek was a self-made man with a clear sense of his own abilities and Angus, although warm and engaging, had that public school confidence and assertiveness that set him a world apart.  I sat and watched as our carefully nuanced deal fell apart before my eyes.  Within half an hour Angus and I were outside on the pavement with Derek’s outright refusal to negotiate further ringing in our ears. Angus put on a brave face and departed for the office.  It was a long drive home but the first thing I did was to phone Derek and seek an appointment with him the next day.  “So long as you don’t have that *&%! with you”, was the response from Derek.  I assured him not.

The next day Derek and I negotiated hard once more, going over the key points but avoiding the pitfalls of the day before.  An hour or so later we finally reached a position we were agreed upon. This time, pay grade or not, I shook hands with Derek, got him to write out and sign the order and headed out back to the office.  I walked straight into Angus’s office unannounced and slapped down the order.  His eyes went wide and then he grinned widely. “You bastard!” was the greeting I got.  But I had brought back the largest ever order in the history of the company and it made sure that I earned a great deal of money that year.  The following month I bought our first family car and booked the first holiday in a long time.

I had certainly made the correct move joining RAV with a level of earnings now flowing that I could only have dreamt of previously.  But once the euphoria wore off I was increasingly bored and looking for a bigger challenge. I was tired of the motivational sales meetings, the endless tweaking of the commission schemes and the lack of any real learning opportunities from the company.

I wanted a move up the ladder; I wanted the chance to do things my way. But could the company provide the career opportunities I now so desperately wanted?

Image courtesy of http://www.Haskins.com

My life in business (chapter 1)

I grew up in central London.  No, not the genteel bits ofWestminster, Pimlico and Chelsea but the deeply unfashionable parts a couple of miles south of London Bridge and west of the Old Kent Road.  We lived in Walworth, just south of that wonderful landmark, the Elephant and Castle,  a traffic clogged island, and now home to probably the worst example of a shopping centre ever created (due for demolition this year – worth a miss).  The area didn’t even have the dubious dignity of being within the sound of Bow Bells, so I can’t even lay claim to being a proper Cockney (even though I am still clearly recognised as a Londoner).

To say I grew up as an example of childhood poverty would rob my family of the dignity we had, be an attempt to misrepresent the love I received from my parents and anyway, the family life we enjoyed was in blissful ignorance of such social-political phraseology.  Certainly, a tin bath in front of the fire on Friday evenings never did any of us any harm and weekly bathing was still the norm in our street.

My early playgrounds were the bombsites that still littered London in the 50’s and well into the 60’s.  Superficially ‘cleared’, these acrid smelling sores contained a profusion of weeds, half-uncovered cellars (under the ubiquitous clogging Bindweed) waiting for the unwary and made convenient shortcuts between streets.  Later, when I was a little older and trusted to navigate by myself on London’s buses and on my hand-me-down bike, I ventured out to the many parks that breathed life into our capital, soaking up the sights and sounds along with the sun that always seemed to shine.  A favourite was BrockwellPark, home to that wonderful lido (first port of call on a bunked-off summer school day).

We were a God-fearing family and it’s fair to say that religion played a strong part in my early life.  We prayed together and we stayed together.  The first real influence of my father came when he handed me over to the parish priest at the local church for regular lessons in the Latin of Catholic prayer and the rituals of serving at altar.  Being universally declared tone deaf by church and school, I was excluded from the choir but, instead, made chief pumper of the ageing manual organ, high up in the loft.  Memories linger even today of that curious and sickly mix of incense and body odour wafting past the old organist and I on its journey to the heavens.

Looking back, poor as we were, I realise that my father bequeathed strong influences and powerful gifts to me.  But by far the greatest gift was a love of reading.  Curled up tight in bed, I would listen intently to the stories he read to me.  Later when about seven or eight I was thrilled when he delivered me one Saturday morning to the library at Southwark Town Hall to join the Young Readers’ Book Club.  Gathered in a half circle around a pretty young librarian we listened enraptured as she read to us and then guided our choice of books for the week ahead.  By age ten I had exhausted the junior library’s stock of books and once more my father took me in hand, across the corridor, into the hushed, enormous room that was the adult library.  Being years too young, my father had cleared the way with the head librarian who nodded sagely at the sight of me and solemnly handed over my very own senior library tickets.  Roaming the adult library was, for me, like being let loose in the biggest sweetshop in the world.  For hours I would scour the shelves in the non-fiction sections for histories of war, of tortured victims, of great suffering and great escapes, long journeys and of adventure in far-flung places.

A cabinet maker born of Irish parents, my father (and son of Joseph of whom I have blogged ‘So you think we have it hard’), married my mother, the youngest of seven siblings from her Italian parents and the only one to be born in the UK.   Protective of me in an extreme, Mum and her side of the family taught me always to be welcoming of strangers and to offer whatever hospitality you had.  Somewhat an oddity, my father belonged to a rare group as a right-wing trade unionist who read the Daily Telegraph.  So, every Saturday morning after I got my hands on the paper, I would read the book reviews, make my pick of the latest publications and run off to the library, where for six old pence I could order and reserve my book choice (no budget cuts then).  Several weeks later a post card would come informing me that my book had arrived and a pristine new copy awaited me. The library also had a huge record section which I set about trawling from A~Z and it is from these old recordings that I found favourites that have stayed with me to the present day, of Bach and the Baroque, the great Italian tenors, through to Blues and Jazz.

My father was a solitary man, without friends, but he always seemed to make the right decisions over who I should be introduced to for guidance.  So, also at the age of ten, I was marched (father never merely walked) off to meet the leader of the local Scout troop, The 15th Southwark.  What followed were four or five years of bliss.  From the claustrophobia of London, scouting transported me into the countryside, which I loved at first sight.  Scouting gave me new skills and confidence, and provided me with leadership opportunities for the first time.  We must have been a typical bunch of local lads but only one of which was I ever to meet again.  However, one of my friends went on to become a future CEO of Sainsburys.  I wonder if anyone else of our past scouting colleagues achieved anything in business.

I must have been reasonably bright as I was the only child in my junior school to pass the Eleven Plus that year.  Memories?  Warm milk, the scrapes I got in on the way home, Betty my first crush, regular beatings in front of the class for continuous misbehaviours, one of which I still savour.  We had a very pretty young student teacher one year who wore very tight skirts which gave me more than one idea for a ten year old. I brought a carefully chosen scrap of cloth from my mother’s sewing box and, from my seat at the front of the class, I ripped it through as she bent down to pick up a dropped chalk; her reaction was better than I could ever have dreamt of and the subsequent beating a small price to pay!

Moving on to Grammar school my performance started strongly amongst the new competition but soon declined.  The school was all boys run by an obscure religious order, the Brothers of St. Francis Xavier.  Good teachers they were not but as wielders of the cane, our very own headmaster was a true sadist.  I learned to love English (the only truly inspirational teacher I had), art and athletics.  A crushing disappointment was music, where in my years at school, we played & listened to – exactly nothing.  Did I earn positions of responsibility and authority? No, but I learnt to fight back when bullied, to orchestrate mischief from the rear, to loathe religion and seethe with frustration when nobody could or would answer my continuing question; why?

At age fifteen I started a Saturday job as a junior salesman at John Collier Tailors and found I could be very persuasive and earned, what for me, was a large amount of commission on my sales. Later that summer, still only fifteen, I skipped school one day, took a number 12 bus to Oxford Circus, walked into the first recruitment office I found and announced I wanted a job.  After a short interview, I was sent that same day to the offices of a large finance company just around the corner and was offered a job as a junior clerk.  

My commercial life had started.

Are bonuses fair?

When I wrote on the subject of bonuses in the middle of last year (Most bonuses are a waste of time) it was on the basis of my views on a subject that has long interested (and involved) me. The row over bankers’ pay had yet to reach the current level of political & public hysteria. Having first been on the receiving end of many different schemes and then being responsible for designing remuneration schemes in many other businesses (including my own), I have some experience of the subject.

Image courtesy of upscale-homes.org

Are bonuses really fair? Is boardroom pay too high? Have the multiples of executive earnings become too high relative to average workers’ pay? Let us consider some aspects of remuneration that don’t get a great deal of light and air in the highly charged political and media circus of today.

Too many issues concerning remuneration have become conflated into the one term ‘bonus’. The definition of bonus that I became familiar with and happen to prefer is ‘Something given or paid in addition to what is usual or expected’. It used to be customary in many large companies that, given a healthy overall company performance in any given year, then a bonus conforming to set formula (often a multiple of an individual’s weekly or monthly pay) was paid. Complex mechanisms were unnecessary and everyone in the company participated in what was a reward.

Sales people have traditionally been paid either commission on sales or a bonus on achievement of a sales revenue or profit target. Both of these two systems have usually included a basic salary. These sales ‘incentives’ often work well when a number of criteria are met – the target thresholds are realistic, the mechanisms are simple to understand, information on progress is readily available and the individual can measure what they are achieving in real time. However, not all schemes were or are well constructed; an old friend and colleague of mine tells the story of an employer who called him in at year end and informed him that he had failed to reach his target. “What target?” asked my friend, “What was it?” The answer came back “You’re not entitled to that information, it’s confidential”.

Sometime over the last 20~30 years, the concept of ‘performance related pay’ became the fashion item amongst consultants, senior management and HR departments. The siren song of a simple way to let money do the management and motivation of a company or department took hold like wildfire. There seemingly wasn’t a role that couldn’t be made to perform better when a carrot was dangled. Couldn’t fail, could it?  Seeds were sown.

Failure to differentiate between a bonus and a reward lies at the heart of the failure of many schemes. A suggestion currently being made is that no-one should receive a bonus (irrespective of their individual performance) until the company reaches a certain level of profit. This has a certain simplistic and populist appeal. However, it breaks most of the basic rules for incentives as detailed in paragraph three above. If I had moved heaven and earth and worked 90~100 hour weeks and had achieved all that had been set for me (or my department), I would be severely hacked off if I didn’t get my reward; a call to my favourite head-hunter would probably be the first call I made. If it’s an incentive, it isn’t or cannot be a reward or be discretionary.

Alignment of board room pay with shareholder interests became the next belief system; shareholder value became the new mantra. I may be in a minority of one but I do believe that managers are managers and shareholders are a different breed. Attempting to create alignment with shareholders via creation of long term incentives paid in share options doesn’t hack it when the vast majority of shares are traded over very short timescales. And as for the concept of paying for above average share price performance of the sector, sorry my friends, it’s laughable. Absolute performance is what counts. If management’s efforts produce satisfied customers, rising market share, cashflows and profits relative to competition then they have done a good job. These activities are the role of management. Linking executive pay to the share price won’t make management any more effective at their day job. If the sales force or managers have absolute targets, then don’t expect anything less at board level. There cannot be a salesman in the world who wouldn’t thank God for a system that retrospectively flexed his target down if the competition were failing. So why for the board?

Is there a better system for boardroom pay that rewards long term performance? There is hardly a main board director of a quoted company that struggles to live on his basic salary (unless he thinks he has a right to live like Bill Gates). Create absolute targets with performance up to the threshold represented by the basic salary and benefits package. For performance above the threshold (set at a genuinely tough level) pay an incentive. However, to ensure consistency of performance (and not short term gaming of the system) I would ensure one third is paid in cash, and two thirds of the incentive is paid over the next two years, but only if the targets for the next two years are met or exceeded.

Rewards for failure?  Executive tenure has been getting shorter for years. The executive who can move companies and go on repeating above average performance is rare (although no-one wishes to acknowledge the fact). Performance is a complex mixture that involves personal qualifications, experience, behavioural attributes and skills plus the right team and a complimentary company culture. If an executive is encouraged to move companies then there is a high possibility of failure (not infrequently due to the hiring management). A contract that requires the giving of a long period of notice on the part of the job holder (as a means of retention) also requires a matching period of notice to terminate. Trying to apportion blame when an executive fails is as complex as attempting to adjudicate where blame lies in a failed marriage. A contract is a contract.

Are high rewards ‘fair’? It very much depends upon the definition of ‘fair’. Most dictionaries have a long list of common meanings for the word – Just to all parties; equitable: a compromise that is fair to both factions; being in accordance with relative merit or significance; consistent with rules, logic, or ethics. It’s difficult to construct an argument that a contract freely entered into by the parties concerned is the business of anyone else by these definitions. The general population is not a party to the process. However, there is a further definition – superficially true or appealing; specious. Fertile ground indeed for politicians and the envious masses. Perhaps we should retain the use of the word fair but restricted to the under fives who seem to understand its meaning so much better.

Whatever your views, vast sums from taxation on the salaries, bonuses and incentives of high earners flows into the exchequer and help pay for much of which is taken for granted. Yes, there are those who find (legal) tax avoidance schemes but it lies within the remit of the Government to simplify the horrendous mess that is our tax system that permits (and encourages) such schemes. Government could also work far harder to eliminate the appalling waste that would never be permitted in the private sector. And evidence based programmes are far more effective than sound bite political dogma and knee-jerk legislation. And if chief executives have ratcheted up their rates of pay by the technique of comparability, isn’t this what unions have been doing for a lot longer?

Finally, by HMRC’s own figures the top 1% pay 27.7% of total tax in the UK; fair or not?