How to win enemies and alienate people…

I spend a lot of my working life in boardrooms.  What I do for a living means I am often required to have tough conversations with senior people.  Most of them are men.   That has never bothered me, nor has it hindered my ability to be good at what I do.  I’m judged for the quality of my thinking, and not my gender.

Which, is why I found myself prematurely walking out of a swanky dinner at Claridges this evening. Hosted by a global search firm, the event was meant to mark the launch of a network to attract female talent into the FTSE boardroom. I was invited.  So far, so good.  I was looking forward to hearing the keynote speakers and networking with interesting people over a glass of champagne. Even better.

Until, that is, one of the keynote speakers stood up and spent the first five minutes doing a Romney. You know, alienating 53% of the audience. Who were female. Who were meant to be the next generation of talent.  Who – might I remind any head-hunters reading this blog – were potential candidates and/or clients.  This man ran data centres. He explained we wouldn’t know what a data centre was – his tone implying that data centres were too technical  for our pretty little heads. The fact that several accomplished MDs for UK tech firms were present seemed to have passed him by. Then he mentioned his ‘other half’. We were urged to feel gratified that this Neanderthal twit had introduced his ‘little woman’ (yes, those were the words he used to describe his spouse), because clearly women are not professionally complete unless they are also sleeping with the boss!

I am afraid to say that common sense overtook courtesy at this point. I voted with my feet before the main course was served.  On the high-speed train home, I reflected on the experience. I have been to many dinners and networking events in the City, often very male dominated.  I can honestly say I have never been offended by the discussion, no matter how robust or different from my own view of the world.  Gender quite simply, wasn’t an issue.  What set tonight’s event apart?

For me it had to be the old-style misogyny and out-moded thinking. This man was representing purveyors of talent, who claim to actively support diverse leadership teams.  Really? As their spokesperson, I certainly wouldn’t want him representing me in the market. Instead of engaging with his audience, he simply confirmed a highly negative stereotype. His archaic leadership model has no currency in today’s workplace, nor is it borne out by the many women who sit on boards in the UK.  This is currently 15%  according to the latest report from Cranfield.  Women also make up 49% of the workforce here in the UK, across both public and private sector firms. Approximately 21% of start-ups in the UK are female-owned or led.

Personally, I think it’s time for a new paradigm. Instead of lamenting the glass ceiling, it’s time we built a new house.  Search firms, investors, networks and employers all have a role to play, as do the men and women who make up our workforce.

What do you think? Should gender matter?  Comments on the blog, please.

The cost of war…

This weekend, all across the UK members of the public took part in Remembrance Day. Traditionally the laying of wreaths and memorial ceremonies marks the sacrifice that men and women have made in defence of liberty and for the love of their country. But do the economics of conflict justify the price we pay?

Regrettably, war has become big business. Yessir, I’ll have a Big Mac. And I’d like a Molotov Cocktail along with my fries!  If you are in the Defence Industry, or on the board of Halliburton –  you should probably stop reading this blog now and start bugging my phone.  Actually, if you work for McDonalds or Starbucks you should probably order a macchiatto and walk away too!

I’m always slightly bemused by the anti-capitalist protesters who are camped outside St Paul’s. Apart from creating their own internal economy – soup kitchens and camping supplies purchased from the outdoors supply store on Ludgate Hill – they seem to have missed the point.  Surely their energetic rage is better directed at the warmongers who manufacture and sell arms that maim and kill, than the bankers who have presided over the recent economic cataclysm?

There are currently 12 major military conflicts happening across the globe. These are wars where the casualty rate is more than 1,100 per annum. Wars like financial crises, oft repeat themselves.

So here are some numbers (in no particular order) to make you think:

  • 35 million. The total number of military and civilian casualties in WW1 is estimated at over 35 million. More than  15 million died and 20 million were wounded ranking it among the deadliest conflicts in human history.
  • $3.2-4 trillion. The total estimated cost for the wars in Iraq, Afghanistan, and Pakistan. According to a Congressional Budget Office(CBO) report published in October 2007, the U.S. wars in Iraq and Afghanistan could cost taxpayers a total of $2.4 trillion dollars by 2017 when counting the huge interest costs  – because combat is being financed with borrowed money.
  • $1.44 billion.  The amount that Veritas Capital Fund, through it’s subsidiary DynCorp has made through its provision of training to new Iraqi police forces.
  • £995bn.  Scale of support provided to bail out the UK banks.  The amount of cash currently borrowed by the government to support banks has risen to a total of £124bn since December 2009.
  • US$100. The average value  paid for trafficked children.  These children are just as likely to be casualties of war as they are of economic hardship.

Forgiveness costs nothing.

The Offside Rule…

So, FIFA have chosen Russia to host the 2018 World Cup.  In a voting process that eerily resembled the Eurovision Song Contest – block voting and nul points – the UK’s hopes of hosting a premier global sporting fixture have been dashed.

Post-mortem wringing of hands, shredding of kit, and blaspheming of the BBC will do little to assuage deep cynicism about an organisation linked for some time to allegations of corruption and shady dealings. I know more than a few people who think a well aimed kick at Sepp Blatter’s head would be an expedient solution!  Brain-injury aside, at the very least, questions should be asked about the governance practice within such an influential regulatory body.

It seems, the recent expulsion of two of senior FIFA officials for breaching ethics rules is nothing new. The BBC’s Panorama programme offered evidence that as far back as 1995, FIFA vice-president Issa Hayatou, of Cameroon, had taken a kickback of £10,000 from the organisation’s marketing arm, ISL. If unethical behaviour is tolerated, questions do need to be asked about the professional impartiality of FIFA.  No doubt, more revelations will emerge as 2018 draws closer.

In principle, the UK bid was strong. A FIFA-backed study by McKinsey supports this. The McKinsey report examined five revenue areas (ticketing, TV and media rights, sponsorship, hospitality and merchandise/licensing) and rated the economic value of the UK’s bid at a joint 100 along with the USA, and well ahead of Russia’s score of 56. But technical excellence can only take you so far. There is of course another dynamic at play here…money.

While the actual FIFA World Cup Trophy is estimated to be worth a trifling $194,285.85 (based on the current troy ounce value of 18K gold) you only need to add several zeros to the end of that number to calculate the Croesus-like revenues from the rights, merchandising and business opportunities brought by a World Cup. In prize money alone, FIFA set aside £250 million for the SA World Cup in 2010. If Football revenues represent the GDP of a small African country, why then should we be surprised that their secretive ExCo demand emoluments for favourable votes?

Multi-millions attract mendacity, whichever way you look at it. But FIFA’s decision does put me in mind of the offside rule…you know, the one where the referee awards an indirect free kick to the opposing team!

For more information on the off-side rule, please see:

http://www.offside-ref.co.uk/

Trust me, I’m a banker…

Our most recent financial crisis has brought the way in which the banks and financial markets operate into sharp relief.  Perhaps more significant is the amount of money it has cost to bail out the banks, as UK taxpayers underwrite levels of national debt which – depending on the election -could herald a new era of sluggish UK growth & relative decline, and strengthen the case for joining the Euro.

Many commentators have squarely laid blame at the door of financial innovation. But financial disasters are nothing new and they are not caused by a single event. They repeat with astonishing regularity, and often radiate from the center through commodity prices, capital flows, interest rates, and shocks to investor confidence.  This time round, cataclysm was closely linked to a series of economic circumstances – strong growth, low inflation and the increased flow of international trade and finance. And although the global financial crisis was not caused by these factors per se, they highlighted the vulnerabilities in the financial and regulatory systems of the UK and US – fundamental weaknesses that were exposed because they combined with a number of unsustainable trends such as rapidly rising property values, high levels of consumer debt and untrammelled bank leverage.

While financial innovation may have a role to play in fomenting disaster, it is likely to occur in combination with other systemic factors. Bankers are incentivised to penalise risks that can be seen and measured, but this time round they invented new and sophisticated financial products which generated added value and high profit, but which carried risk they did not see – or perhaps chose to ignore.

 In good times, the City attracts wealth, generates economic wellbeing and creates employment. In bad times, it can put our AAA credit rating at risk and prolong recession by limiting the flow of credit in the financial system. Still, financial services are crucial to the allocation of resources in a modern economy. We would be wise to realise it will be impossible to prevent future calamity – that is simply the inherent nature of the capital markets. By implementing a combination of regulatory and systemic changes, the UK may seek to retain its position as a leading global financial market. A successful outcome will depend largely on the appetite of the State to do battle with the bankers, and the motivation of investors to think intelligently about financial innovation.

The Ethical Imperative…

As four Rio Tinto executives are jailed for bribery, and BAE Systems fined £30 million to settle further investigation by the Serious Fraud Office, it’s easy to be cynical about the ethical intent of large corporations.  Nevertheless, it is rare to find an organisation without a mention of ethical business in their annual report, but is this just ‘greenwash’ or ‘hogwash’?

Corporate Social Responsibility (CSR) is not a new concept. Business philanthropy existed as early as the nineteenth century with the development of model factory villages in the UK such as Cadbury’s Bournville and Lever’s Port Sunlight. What has evolved is how large corporations now respond to the challenges of a shifting and dynamic business environment. The way things were is not the way things are.  Chief Executives and their boards find themselves in a strange new reality – one where good corporate citizenship, stewardship of the environment and responsible business practice are no longer optional extras, they are ethical imperatives.

Today’s CSR landscape is often complex and multi-dimensional, involving diverse groups or individuals who may at times have contradictory or competing agendas which run counter to an organisation’s profit motives. And seismic trends such as globalisation and climate change have radically altered the role that corporations play in society. In counterpoint, the expectations that society has of these organisations has also shifted. We’ve moved on from Milton Friedman’s bold free-market view that ‘the social responsibility of business is to increase its profits’. In practice, the manner in which firms now conduct business cannot be disassociated from the perceptions of stakeholders – who may be impacted by such activities – nor can it exclude the judgement of stockholders – for whom financial performance is a key driver.  To put it another way…whether in Borneo, Beijing or Bradford, it is no longer possible for big business to operate independently of the society in which it finds itself, even if it wants to.

One of the most significant drivers in all of this is the transparency and immediacy of modern media. For the iPod generation, the sins of their corporate fathers can be streamed live via RSS feeds and mobile downloads. The inexorable rise of blogging and ‘tweets’ (via Twitter) means the battle lines for corporate reputation are being drawn virtually. Nowadays there is nowhere to hide CSR indiscretions, but doing nothing isn’t an option either. Errors can be costly in both financial and reputational terms. Corporations are primarily motivated by profit, so risk and opportunity also have a contribution to make in shaping CSR strategy and its eventual implementation. Wise organisations reach a compromise between ethics and economics.

This is an excerpt from a longer paper on CSR. If you’d like to know more about CSR strategy or implementation, please contact Lisa Bondesio via lisa@chiridion.com