Inexperienced Politicians Holding Back British Business
Korn/Ferry Boardroom Pulse: Inexperienced Politicians Holding Back British Business, Say Ftse Chairmen
Politicians are in danger of holding back British business, according to FTSE 100 chairmen responding to the latest & lsquo;Boardroom Pulse’ survey* conducted by Korn/Ferry Whitehead Mann, the world’s largest executive search and talent management consultancy.
An overwhelming 89% of chairmen agreed with the opinions expressed by the Director General of the British Chambers of Commerce at its Annual Conference in March that a lack of commercial experience among politicians is inhibiting British business.
Respondents to the survey, which was created to give FTSE 100 Chairmen a collective voice on the topical business and governance issues of the day and to offer a real-time insight into the boardrooms of the UK’s most powerful companies, were clear on the issue.
“Our standard of political assistance to businesses is truly appalling and the major parties should & lsquo;sub-contract’ this element to tried and tested business professionals (retired if necessary)”, said one Chairman. Another expressed the view that “politicians have no experience of change management or the impact of decisions on the present value of future earnings” and another suggested that “decision-making in the Government is slower than ever”, citing energy policy as the most obvious example.
While one Chairmen expressed the belief that “when politicians interfere in business it is always a disaster”, another stressed that “it is not important for ALL politicians to have commercial experience, just as it is not necessary for ALL board members to have expert domain knowledge.” The overriding view, however, was that the lack of wider experience among politicians is detrimental. As one Chairman put it: “This is a wider concern than just about British business. The current crop of politicians has very limited experience of the world outside the corridors of power.”
Dominic Schofield, Senior Client Partner with Korn/Ferry’s Board Practice, commented: “An overwhelming majority of the FTSE 100 Chairmen we spoke to felt strongly that a lack of commercial experience among politicians is hindering British business. It seems clear that something needs to be done to tap into the business expertise available in order to improve the political decision-making process around issues affecting the economy and the wider business world.”
Sustainable economic recovery
Opinion was more divided on whether the UK is experiencing sustainable economic recovery, with 61% of respondents agreeing that it is and 33% disagreeing. One chairman agreed “subject to the Euro not falling into crisis” and another thought that the Chancellor was “doing the right thing” by “diverting resources to the private sector.”
However, another respondent believed that “the coalition government is failing to deliver on policies to set the economy on an even keel.”
Foreign and private equity ownership of UK utility companies
The survey also covered the issue of foreign and private equity ownership of UK utility companies. Less than half of respondents (44%) agreed that this ownership trend has led to an over-emphasis on financial return at the expense of customer and societal contribution, while more than half (56%) disagreed.
One chairman argued that most remedial work and investment in infrastructure has taken place since privatisation and that “the track record of privatised utilities is better than under state / public ownership”, whatever the nationality of the owners. Others argued that the role of the regulatory regime is to protect the interests of the customer and that regulators and government agencies “have the collective power to ensure the interests of all stakeholders are properly balanced,” whatever the domicile of utility company owners.
There was division on whether there are any business sectors that should never be foreign-owned, with 50% agreeing and 50% disagreeing. One chairman recommended that “businesses which are critical to the UK’s national infrastructure” should never be foreign-owned and another made the same point about “certain defence companies”, but another suggested that “economic ownership of strategic infrastructure assets is less important than standards of corporate governance and transparency and long term commitment to sustainability.”
The July 2013 Boardroom Pulse is formed from responses from Chairmen of 34 of the FTSE 100 companies, with a combined market capitalisation of £642 billion and approximately 2 million employees.