One day this could all be yours……

Nick Clegg’s recent suggestion that voters should be given shares when the almost nationalised banks are returned to full private ownership has received mixed reviews.  For many it is a throwback to the eighties and the swathe of privatisations initiated by Mrs Thatcher’s government in her attempt to transform the UK into a property owning share owning democracy. The iconic “Tell Sid” campaign to sell shares in British Gas was perhaps the most memorable privatisation, and the one evoked by many commentators on hearing Clegg’s proposals.

Arguably though, it was the “free” shares which followed the demutualisation of a number of building societies from 1989 onwards that dramatically expanded the shareholder base in the UK, rather than the privatisations of the eighties, and these are probably a better comparison for what the deputy PM is trying to achieve. Therefore Nick may be onto something after all.

Widening share ownership has long been seen as a way of cementing the primacy of capitalism and giving people a real stake in the future wealth generation of their own, and the country’s, businesses. Whilst privatisations and demutualisations have hogged the headlines, the spread of employee share schemes, many of them tax efficient, have also played a key role. Whether through Save As You Earn share schemes, Enterprise Management Incentive schemes or bog standard share option arrangements, the carrot of participating in the future value of the business has become a key component of many employee packages.

“Ownership” of course is an interesting concept in itself. The contrasting styles of the “absentee landlord” institutions and the more “hands on” style of entrepreneurial businesses large and small are clear to see. Dealing with ownership by targets versus ownership by gut feel is a challenge for managers and employees looking to make their own contribution to the success of a business.

The move from employee to owner is an interesting one. MBOs are still a very popular exit route for many owner/managed businesses. However the difference between receiving a regular salary one day and suddenly being responsible for everybody else’s the next is quite a psychological leap, and one that many owners and employees need to think very carefully about when considering this option.

Business ownership theory is often focused on the financial side, hence the bias towards shares. And yet for it to be really effective as a tool for engagement and incentive surely it needs to be mental state as well. People need to feel like owners. Whether it is Nick Clegg giving away free shares in nationalised banks or an owner managed business selling to an MBO team, the head needs to be right if the wallet is to follow. Real ownership I would argue is all in the mind.

Falling on one’s sword……

An interesting poser for Nick Clegg after last week’s election debacle. At what stage does he chuck it all in? Not only has he presided over the biggest electoral defeat in the modern history of the Liberal Democrats, and suffered a severe blow to his reputation and credibility, but he has also probably seen the issue that is most dear to his supporters’ hearts, electoral reform, kicked into touch for the foreseeable future. On this basis there could be a strong argument for him standing down and letting someone else take over.

Of course politics is not like the real world. Or is it? There is much discussion in business and in politics about doing the decent thing and resigning over poor performance. People must be held accountable. Barely a week goes by without somebody calling for the head of this business or that or organisation, or, more commonly, the minister for a poorly performing department.

Accountability may sound good in theory but is very difficult in practice. At one extreme you have football managers for whom a run of bad results will probably result in the sack even if it is the fault of the players or the board. At the other end of the scale you have time serving civil servants who will probably never be dismissed however poor their performance or disastrous their decision making. In between there are varying degrees of culpability and a sufficient number of grey areas to make a “should they stay or should they go” decision extremely difficult to make.

And where does that leave the average business owner in Enterprise Britain? Ok were they to make mistakes of the magnitude of their bigger rivals they would probably not be in business anyway. But if they do survive, well, what then? Resigning is clearly not a viable way out as it is likely that that the business would fold anyway. They often have to plough on best they can, putting it all behind them and making the most of what they can salvage from their situation.

Failure is still a cultural issue in UK society. We are not allowed to admit to it. We are expected to take responsibility for it. We are very rarely permitted to learn from it. Is it any surprise that in many cases people chose to cover it up or deny that it even happened?
And yet failure is often a precursor to success. It is only by trying things out and making mistakes that we often stumble upon what works. As long as it is not the result of recklessness or incompetence failure can be a valuable lesson that is then used to create something really successful.

There is no easy answer as to whether failure should result in instant dismissal or a second chance. It is often down to whether there is another option, whether the lessons have been learned or whether the individual concerned is capable of turning the situation around. In the case of Nick Clegg, dear reader, I’ll leave it to you to decide….

Business planning – up in the clouds or down to earth……?

The two major news items of the moment, Nick Clegg’s apparent triumph in the televised election debate and the volcanic cloud that is currently playing havoc with the skies have brought to mind Harold MacMillan’s alleged quote when asked what was most likely to blow a government off course.
 
The source of the ex Conservative prime minister’s comment “events dear boy, events” has never been properly substantiated, but nonetheless, it is probably haunting his would be successors now, as all their months of meticulous election planning have had to be put to one side, to deal with these two unexpected events.
 
Many businesses, not least those involved in air travel, are also having to come to terms with the impact of the Icelandic eruption, which threatens to wreak more havoc on the UK economy than the collapse of the Icelandic banking system. Whether it is key employees being stranded, or the disruption of key transport connections, or the impact on customers and suppliers, companies are having to find solutions to the problems that have emerged.
 
It is moments like this where the merits of business planning tend to be questioned. “How can you plan for this?” is a common jibe, dug up whenever somebody has the temerity to suggest that their organisation might need some sort of business plan. A lot of this stems from the corporate or government approach to planning, which in many organisations means a political exercise designed to promote or preserve the position of senior executives or civil servants.
 
The reality is that planning is not just about plotting a single course. It is about preparing for the unexpected. It is about creating a culture within which uncertainty can be recognised and dealt with. Above all it is about producing a framework within which quick decisions can be made to deal with a range of scenarios.
 
Businesses with robust planning processes will have already started to look at the risks and opportunities that the current situation presents. They will be aware of the resources that they have available to manage these, and will be working out how to deploy them to maximum advantage. In short they will be much better prepared and much more able to survive than businesses that don’t have such processes.
 
As for the politicians…..