'Have Britain's businesses been taken over by the mob?'
The role of non-executive directors, complex global supply chains and executive pay contracts have resulted in a vast disconnection between British businesses and the public.
So claimed Norman Pickavance – former supermarket executive and social enterprise chair, now turned author of a new book on leadership – at a roundtable discussion this week in the House of Commons.
Citing examples from the past year such as the huge fines being imposed on leading high street banks, the news that Tesco was found to be declaring false profits and GSK’s involvement in bribery, Pickavance made comparisons between British business culture and that of the The Godfather.
“The behaviours of extracting sums of money, of bribing people, of acting in a very non-reputable way are the behaviours that one would expect in a mafia movie,” he said.
Pickavance is currently the special advisor for A Blueprint for Better Business – an initiative that aims to encourage business leaders to create a business culture that serves society as a whole, rather than being solely focussed on profit and shareholder value.
During the discussion, which launched his new book The Reconnected Leader, Pickavance said: “I found myself asking – have the boards of British blue chip businesses been taken over by the mob?”
The Reconnected Leader identifies key areas of disconnection that have led to deterioration in the reputation of British business as a whole. These include non-executive directors whose responsibility it is to provide scrutiny and insight of businesses, “but who are actually only in those businesses for two days a month”.
Pickavance continued: “It is impossible if you are on the board of a major organisation to provide effective oversight of a huge business in two days. Boards spend days looking at senior high profile talent and yet at the same time regard other sections of the workforce as disposable commodities.”
Another of the areas covered at the discussion was the disconnection caused by executive pay, “where contracts focus exclusively on the narrow achievements of short-term goals”.
The problem is not that the goals are financial, said Pickavance, it’s “that they don’t consider anything else” and are “excluding so many other aspects of what’s going on in that organisation”.
The complex network of global supply chains were also cited as a major problem for British businesses today because they have become so vast that it is impossible for board members to oversee every aspect of the chain.
“There’s a complete disconnection in space and time – they cannot possibly be providing the necessary insight,” said Pickavance.
There is now quite a lot of evidence to show that businesses with the best values attract the best talent.
Shadow business minister for trade and investment Ian Murray said the solutions to this disconnection between British businesses and the public did not necessarily lie in government, but within the business community themselves.
“Whilst regulators and governments can also do something about it, I think when governments intervene it just shows you that the business community have either lost the trust or are no longer responsible for doing it themselves,” the Labour MP said.
Murray also spoke of the need for a culture shift in business as a whole stating: “There’s a real problem I think in terms of disconnect between business and their societal role in ensuring people are being paid properly.
“Wage growth is starting to move forward a little bit, but I would argue that some of that, if not the majority of that growth is at the top end and not the bottom.”
Hazel Blears, Labour MP for Salford and Eccles and long-term advocate for the social enterprise sector, spoke about the need for creating a strong business case for social and environmental responsibility.
“There is now quite a lot of evidence to show that businesses with the best values attract the best talent – this generation now wants to work for a business they are proud of,” she said.
He was also chair of award-winning social enterprise Create, which soared to success but then plummeted to failure in 2013.
Photo credit: Eneas De Troya