Businesses Behaving Badly

To repair the battered image of business, corporations must be proactive in improving their governance to become part of the solution, says James Sproule.

Perhaps it has been a worse year only for David Cameron and for pollsters – 2016 has been, without doubt, an annus horibilis for the reputation of business. Scandals came thick and fast and the image of BHS workers locking up stripped-out high street stores juxtaposed with a tycoon on a superyacht will not be forgotten soon.

But while Mike Ashley and Sir (still, just) Phillip Green represent the pantomime villains in this piece, their behaviour – rightly or wrongly – reflects on the rest of business and indeed the very system of democratic capitalism, which has done more to deliver prosperity than any other system yet known to man. While the vast majority of business leaders are more likely to have remortgaged their home than buy a football club, it is not those business leaders that end up on their front pages.

As the books on the Brexit campaigns land on doorsteps across the country and the personality post-mortems continue apace, the message remains abundantly clear: many of those who voted to leave the European Union did not feel that the status quo was working for them. Too many people have felt they had no stake in the success or failure of the UK economy. Some have unfairly described some of those leave voters at the bottom end of the economic ladder as turkeys voting for Christmas, bearing in mind the warnings beforehand that a vote to leave would imperil their jobs. But when some parts of the country have been in something like recession for twenty years, the cries of multinationals do not have much resonance; the appeal of throwing the cards up in the air and seeing where they land is obvious.

Let’s be clear; if people lose faith in the system, the answers that all too often come are the siren calls of populism, isolationism, and parochialism. That is not good for anybody.

So what more does business need to do?

The first is to respond in the right way to the Government’s Green Paper on Corporate Governance by recognising that its very existence reflects legitimate anger. Now high pay in and of itself is not a bad thing; that one individual earns more than another is not reason for self-censoring pay. But it is incredibly difficult to justify the fact that pay at the top levels of our largest firms has been ratcheting up for years whilst shareholder returns have stayed broadly stagnant. If ‘alarm clock Britain’ – as Nick Clegg once memorably put it – is putting the hours in and seeing little reward for it in tough economic times, it will stick in the craw that those at the very top continue to find ways to wring more millions out of our largest firms’ bottom lines.

The second is to train the coming generation and those needing to, or wishing to, change careers. This has to be done through both through real and legitimate investment in company schemes, but also by doing more to work with Academies and universities. There is no excuse for a company simply waiting for the education system to produce work-ready school leavers and graduates. The curriculum and the changing nature of work simply make that impossible to expect. It must be a two-way process, and business leaders that offer only criticisms of the state of Britain’s workforce, rather than involving themselves in the solution, are simply abrogating their duty. Many are doing brilliant things to ensure that homegrown talent is able to not just survive but thrive in the 21st century – but there remains much, much more to do.

Third, it’s crucial that we get the gig economy right. New platforms like Uber and Hassle are just the beginning of what we expect to be a new wave of companies and ways of working. If these companies are to succeed they are going to have to fulfil a real consumer need, but also to attract good and motivated workers. Government has to avoid knee-jerk regulation, but businesses must be alive to the need for long-term success and what responsibilities that entails.

Above all, I am a capitalist, a free marketer, and a believer in the value of business. Moreover, I believe these are going to be the values that give business the flexibility to meet the opportunities and challenges of the coming years.

In Ed Miliband’s now infamous ‘producers versus predators’ speech some years back, he accused business leaders of being deaf to the concerns of their employees and the public at large. His solutions may not have been everything business men and women would have wished, but his questions and concerns remain pertinent.