Is the world waking up to shareholder power?

As readers will know - I've been recommending for years that shareholders should be given a statutory role to get more involved in companies' activities. Prime Minister David Cameron and Business Secretary Vince Cable are now talking about making it a legal requirement for shareholders to have mandatory oversight on directors' pay.

However the time it has taken for emergence of this level of interest in changing the free market model is frankly a disgrace. The prevailing idea that somehow allowing the status quo (on the basis that top talent would walk elsewhere) was blind stupidity. The so-called top talent is often nowhere near as good as the huge salaries that they command appear to state.

The reasons are fairly obvious - big corporate doesn't have any binding requirements to engage with the wider community and the impersonality of size obscures the ground-level impacts of executive management behaviours. Only now are people beginning to make the connections between the free behaviours we have been brainwashed into seeing as acceptable.

The question for the moment is whether this awakening will spread to other areas of corporate activity. Shouldn't there be greater oversight and wider stakeholder involvement in more than just executive pay? The Pension Funds have not done society a huge service to date by their silence in the arena of corporate governance and it would be useful to have rather more critical voices aired.

Time to push the Compleat Biz agenda a little harder - the politicians appear to be starting to listen.

Well-Being in the corporate world

Things have been changing this year. Not only is society coming to terms with credit crunch and eurozone crises, it is also beginning to challenge some of the traditional approaches to running things in general.

Take the third sector. Lots of well-intentioned and enthusiastic people who are trying to make a difference but the old models of individual charities are starting to come unstuck as the sources of funding from the public purse dry up. It is carnage in some areas but there are a number of leaders who are looking for alternate routes to sustain their operations. Great opportunity to influence them to become more compleat in their thinking - and hence better fitted to meet the challenges they face.

With colleagues I've been looking at some new models of support that would share costs, increase professional inputs to management and help these bodies get themselves into shape financially. Can't say that it is fully-functional right now but there is clear demand from the charities for professional help.

If you want to know more - then drop me a line. After all, best practice is there to be shared.

Thanks, Sir David ...

Yesterday I was among the audience listening intently to Sir David Attenborough as he gave a lecture entitled People and Planet. The thrust of much of his argument is that we need to deal with the taboos surrounding the issue of ever-expanding population growth and the impact on planet earth. Given that the lecture was chaired by HRH Prince Philip KG KT, neither speaker pulled their punches.

This has left me wondering whether in fact the same taboos are affecting business? The reality of never-ending expansion is clearly unsustainable. So what if, following the opening of the population debate in such eloquent fashion by Sir David, discussion starts around ways in which we can operate that do NOT require ever more resources and continual growth to deliver meaningful employment? We should be able to employ people and give them a good standard of living without at the same time vastly increasing their resource consumption.

There seems to be a lesson for business here based in the Natural World. Populations that overreach themselves collapse (like the Arabian Oryx) and even Man is not ultimately immune. As Attenborough pointed out - there are two alternatives. We can stop the expansion by Contraception - which in business terms means developing models that don't require being ever-bigger in business. The alternative is an increased Death Rate - through famine, disease or predation. For Famine we can insert more bankruptcies due to inadequate markets to support the underlying businesses. For Disease we can expect malfunctioning businesses that are increasingly unable to serve their customer base. And for Predation we can - in Sir David's words - insert War. The latter may be commercial or the rather more traditional sorts of outbreaks of fighting that have plagued mankind throughout history.

So what - if anything - does this tell us that's new? Well maybe nothing other than that, at last, some well-respected voices are being raised to question the sense of humankind's behaviour. The Compleat Biz has advocated that this should be an inherent part of business thinking. So I'm pleased to say that - in the business world at least - we got there before one of the world's great naturalists. However we cannot rest on our laurels. The real test is to see just how far and how fast the message can be spread before it is all too late.

Who pays for incompetence?

Round 1:
A friend from Germany was recently applying for British Citizenship and - being a diligent individual - had followed the instructions to the letter. All the appropriate forms were completed and the whole lot sent off with instructions to pay the amount listed on the Borders Agency Website.

What my friend did NOT know was that the amount payable had been changed a month earlier. Nobody at the UKBA seems to think that they should have updated their website at the same time. Consequently the whole bundle of papers was sent back with an instruction to pay the correct amount.

Now if this was a retail business the Trades Descriptions Act would apply and the supplier (in this case UKBA) would be bound to provide the service at the advertised price. Try telling that to someone who simply follows their internal rules and has no sense to see the issue.

Round 2:
Having decided that there was nothing for it but to pay the revised fee - all the papers were repackaged and sent off with a NEW payment instruction for the higher amount.

Of course that should have been the end of it and a new British Citizen would shortly be celebrating the fact.

Needless to say further incompetence has intervened. UKBA seem not to have received the payment instruction because the whole pile of papers came back again, with a letter telling him to pay the correct amount and minus the payment slip that had been included two weeks previously.

You would think that in this day and age that a Government Agency was capable of opening its post without losing stuff - especially when it is sent Special Delivery.

Overall my friend is no further advanced with his application and has so far spent £5.50 on each occasion with Royal Mail and UKBA are incurring courier fees with DX for sending the papers back again. And all because someone in their administration cannot (a) update the marketing material in a timely fashion; and (b) cannot open the mail without losing slips of paper.

Given the focus on cost saving in Government - it is about time that this kind of incompetence was eradicated. Ultimately the British Taxpayer is footing the bill at both ends. I suspect that the issue here is far from uncommon and in most instances the recipients of this treatment are hardly in a position to make a complaint. They simply have to shrug their shoulders and go round the loop again and again ...

The problem ultimately stems from building rigid systems that have not been thoroughly thought through and tested. There can be no legitimate complaint from the Civil Servants that they are overworked. This is a foolhardy approach to procedure that is costing everybody time and money.

If YOU were hiring people to operate a business for you - would you let this type of attitude prevail?

Reducing waste...

I was having a discussion the other day with a senior Civil Servant about the impacts of Primary and Secondary Legislation on workload in government.

Historically Government has always distrusted minor errors creeping into administrative areas even when it can be shown that their incidence is very small paling to insignificant. The response has mostly been to add additional legislation requiring more layers of bureaucracy, checking and Rules - often to little overall effect. This reminded me of the work of the House of Lords Select Committee on the Merits of Statutory Instruments last year. Lord Filkin, the past chair, pointed out that there is an "optimistic belief ... that something would happen in the way you thought it would" when legislation was drafted. The Committee also went on to comment that "they [Government Departments] are weak on really thinking through if this is the best way to get what they want."

All this ties together when you realise that vast areas of government administration are bound by such oft-misguided law. What if we could release some of the workload? Better government or at least as good as now but with less effort - leading to efficiencies.

Therefore - as we approach an Election wherein the topic of savings to the economy are at the forefront of everyone's mind - maybe now is a good time to question whether there might not be a better way of legislating for administrative matters. At least there ought to be rather more trust of the workforce to do the right thing, coupled with accountabilities when things occasionally go awry.

The current mechanism that relies on leaving things to internal Policy Units is fatally flawed - they simply cannot write a rule for every occasion and the lack of allowed discretion in the Public Sector these days is strangling effectiveness at birth. Policy statements should set out an ethos to be followed. That kind of guidance is much more flexible when dealing with the occasional curved ball.

Doing as we are told...

Something happened the other day that set me musing (he's off again I hear you say...)

Fundamental changes have crept in to the way we interact in our society over the last years. This has a lot to do with the introduction of ever-increasing regulation and a reluctance on the part of many people to take things at face value. The consequence is that when we deal with strangers - particularly in commercial transactions - there is a tendency for responses that throw up huge potential issues.

The case in point was some instructions I had issued to a company to move a not insignificant amount of money. Instead of just doing as they had been instructed, I was furious to find that 48 hours after the instruction had been acknowledged they still had not done anything. The reason turned out to be a reluctance on the company's behalf to be certain that what I was doing was in my best interests. They had not thought it appropriate to contact me as a matter of urgency by phone and left it to an email 2 days later that then did not get read until some 5 hours after it had been sent.

In an age of execution-only dealing this was breathtaking in its stupidity. "Who are you" I asked "to decide what is right or wrong for me? Why haven't you done as you were told?" The response was a muttered "er, well we weren't sure." Clear printed instructions are, apparently, not enough these days. The fact that a delay of 48 hours might cause some financial embarrassment (not to say potentially huge loss) had never entered the head of the individual concerned. He was intent on protecting his company from the possibility of being seen as careless in the eyes of the FSA.

This showed a complete loss of focus on the customer (a key principle of a Compleat Biz) and the mesmerising effect of hiding behind a rules framework that, although intended to protect innocent investors, does absolutely nothing to reinforce attitudes of timeliness and accuracy that once were normal.

How often do you come across instances where giving instructions meets with the same hide-bound approach? Answers like "we don't do that" or "that's not possible on our system" abound. Getting to someone who has both the intelligence to recognise the stupidity and is also in a position to do something about it can be very difficult indeed. Like the operations director of another investment company who admitted that his systems could not send correspondence direct to a client - even though both the client and his IFA had instructed them to do so. Why? Because whoever designed the system had not allowed for two correspondence addresses - even though the marketplace commonly allows for correspondence to go direct to a client and copies to be sent to an adviser. Yet the rationale behind this restriction was not one of data storage but rather a view that individuals cannot be trusted with their own decisions. Someone else has to be in the loop to make sure that Mr Jones is not making a mess of his own finances.

Now, we are told, even more rules are being introduced in the area of mortgages. Self-certification is to be ruled out (without any real understanding of how that is going to affect the self-employed whom it was aimed at in the first place). More bureaucracy will surround even the simplest of loan applications... and so it goes on.

You might think me cynical on these points but I fail to see the broader sense in all of this. We should be encouraging more personal responsibility not taking it off the shoulders of the individual and putting it on someone else - be they mortgage lender or some other institution. The stakeholder who is being treated badly here (in the name of nanny actually looking after them) is the individual.

We can set different norms in society about savings ratios and so on without insisting that everyone goes through a state-defined series of tests before they are allowed to do anything that has financial consequences beyond the end of the month.

In a recent Public Sector Tender for a relatively insignificant local authority project - the requirements insisted on seeing Tax Certification that the suppliers did not owe anything to HMRC. What that had to do with the Local Authority in question is undefined. They are not the Tax Police. If they want to feel totally secure that they are only dealing with organisations that are beyond reproach on every level - that betrays a complete lack of understanding of the realities of this world. And yet this insinuation of oversight, rechecking and certification is spreading like wildfire.

On the downside, nobody is challenging the costs to society. We appear to have lost our collective intuition about such matters. It has been replaced with the idea that if you follow rules you cannot be reproved. Yet just who is writing the rules?

When does the Civil Service rise above the Law?

Now this is going to be quite short.

Over recent years I have come across a number of instances where the Civil Service in the execution of their duties have seen fit to impose an interpretation of the Law that has no foundation in legislation.

All well and good - but what does that mean in practice?

When challenged - the standard response is "our Policy Unit has set out the Rules" - yet when asked how these relate to underlying legislation, NOBODY will hold their hands up and accept accountability.

Take the supposedly simple Rules surrounding an International Student looking to come and study in the UK. Recently these were tightened up to ensure that applicants are intending to study at a bona fide college or school and hence stop a common route for illegal immigration. And quite right too. But then the administrators take the Legislative Requirement that anyone coming to the UK under such conditions must not have recourse to the Public Purse and give them a vicious twist. For the uninitiated the legislation means the student has to be able to support themselves whilst here, since they cannot claim Social Security.

There is Guidance - setting out how much that might reasonably be expected to cost, taking into account London or other locations, Course Fees and duration. But the present approach seems to be to treat that Guidance as immovable LAW. How idiotic when you consider the consequences.

This means that families wanting to bring a relative to live with them whilst they study in the UK (or philanthropists who are prepared to do similar) are apparently required to prove the existence of £thousands that will never actually be needed to pay for rent etc before a Student Visa will be granted. It appears that nobody in authority considers the human fact that not every student is going to be living in a flat and be paying food and accommodation charges.

This appears to be the tip of a very large iceberg in approach. Who knows what other invented rules are being rigidly adhered to to the detriment of human lives? And therefore I think it is time that a more rounded approach was required of our Civil Service Administrators - to think through the intention of the Law and apply that, not rigidly follow rules on the basis that doing so avoids any possibility of being accused of getting it wrong.

We hear via the media of interpretation of other things such as European Arrest Warrants that never expire and cause potential mayhem for a woman who thought she had been acquitted in France. We have absolutely no idea who the people are who make these decisions nor do we apparently have any way of keeping them in check. This is NOT an holistic approach to all the stakeholders in our Society.

It all makes for increasingly dangerous times - and even more so when the result is to mess with the lives of young people who are trying to make their way in the world. So how do we get accountability back into the Public Services?

Answers please - because I'm damned if anyone in a position of power seems to know or is prepared to stick their neck out.