Inept, incompetent, incapable… and in charge

The announcement of the names in the 2016 New Year’s Honours list brought the usual torrent of abuse from the commentariat about cronies, time servers and the usual quota of, to quote Bernard Levin, the hopeless the hapless and the helpless.

Pride of place in the latter category was awarded pretty unanimously to Lin Homer the soon to be departed head of HM Revenue and Customs. The media had a field day as they scrutinised her CV and her dismal record of sustained ineptitude.

I was going to start this article by saying:  “I will consider whether or not the continuing presence of managers of the calibre of Lin Homer should be phased out or whether we should we simply leave things as they are on the grounds that the bunglers don’t do that much harm, that they add to the store of national gaiety, that getting rid of them would put some campaigning journalists out of work, and finally, the trickiest point of all, are there replacement candidates of adequate calibre available?

But Lin Homer has now decided that enough is enough and called it a day. To say that she fell on her sword would be a wholly inaccurate description of her departure, since she will leave HMRC in April with a pension pot in excess of £2 million accumulated from a career of unblemished incompetence in senior managerial jobs in the public sector, and finally garlanded with a damehood.

So I will confine my comments to the performance of senior managers on the basis that unless and until the demonstrable problems at the top are solved, things can only get worse.

While the performance of UK senior professional managers is a much-neglected topic, some of them have acted to the detriment of the social and economic life of the country.

The performance of professional managers matters a great deal to all of us, and, in general, the more senior the job, the more critical is his or her performance. The performance of professional managers in Britain varies considerably with the likes of Lin Homer at the bottom.

There is a great deal of loose talk surrounding the subject of management. When we talk about the abysmal performance of the National Health Service what do mean? The hospital buildings don’t fail, and the prescribed medicines do their job. I suggest that we mean the collective performance of its managers.

Similarly, when we suggest that there is scope to improve the performance of our education system from infants to post graduates what we really mean is the sum of the performances of all the managers. Ditto the performance of the banking system, the performance of the Environment Agency, the performance of Sainsbury’s, of BP, of British Gas and so on. These and the performance of all of our institutions, companies and quangos are, in effect, the product of the performance of their respective managers.

The quality and calibre and competence, and, above all, the performance of management are key elements in the quest for national improvement.

The performance of public sector managers is of special concern to those who care about and argue the case for the delivery of high quality services in the public sector. So what is the collective performance of UK senior managers?

The answer depends on who is asked the question. Chief Executives in the public sector, a rapidly proliferating species, will argue that the only factor which prevents them from organisational perfection is the tight control exercised by central government. University vice-chancellors will state that is well in our institutions of higher education and cite in evidence the ever-improving average grades of degrees. They will also take the opportunity to bemoan the lack of adequate funding.

The manager of Aston Villa Football Club might like to make a similar claim to excellence of performance but he might be regarded with scepticism because at the time of writing his club is bottom of the Premier League by a margin so great as to suggest that relegation ought to be to the third tier rather than the second tier next season.

Why do some senior managers get away with mediocrity and worse, while others are held to account?

We live in a target-driven society and we measure, or try to measure, or pretend to measure the performance of the UK economy and some, but by no means of all, of its component parts.

At the carefully measured end of the scale, we have the managers of the top division of English football. Just ask any them about the closeness of the scrutiny of their performance. One defeat and there will be dark mutterings about whether the sack is imminent,

Many senior UK managers are not subjected to this permanent ordeal and this is especially so at what we might term the cushy number end of the scale where there are corporate visions and mission statements that bear little if any relationship to the real world. In these areas, the measurement of managerial performance will be perfunctory and sedate.

The measurement of managerial performance ought to be well nigh universal and it ought to be accompanied by penalties similar to those meted out to faltering soccer managers and, in particular, the awarding of a prompt P45 for the failures. I argue not from any spirit of vindictiveness but because the nation simply cannot afford to retain failures in senior executive positions,

For every celebrity managerial bungler who hits the headlines for all the wrong reasons (Lin Homer?) there are many more who prosper serenely in senior jobs, undisturbed by the consequences of their occupational inadequacy.

Considerations of space must limit the details of the worst performers but a selection might include: Paul Flowers from the Co-op, Matt Ridley from HBOS, Stuart Gulliver from HSBC, George Simpson of GEC, Chris Gent from BT, George Entwistle and Alan Yentob of BBC notoriety, and Sir Iain Vallance, my personal nominee for the bungler of bunglers award.

The senior management team in Britain is the Cabinet of Her Majesty’s Government. Sadly the catalogue of prime ministerial appointments down the years has included some notable accident-prone bunglers. On the credit side, the greater the original error, the greater will be the public clamour for the selection either not to proceed or to be reversed. A boon in a healthy democracy.

One aspect of the contribution of parliament in this area stems from the work of parliamentary committees. In recent years the grilling of national bunglers by parliamentary terriers has been both a safeguard against further excesses and , on occasions, a joy to watch. The treatment of Bob Diamond of “I just love Barclays” fame, of Sir Philip Dilley (the leisure-loving and now ex-chairman of the Environment Agency, HBOS chief Andy Hornby and so on.

Many of us have our own favourites in this category of public ridicule and denunciation, and all of us should (apart from those enduring the ordeal,) should be grateful for the system.

Is the average competence of senior managers in the public sector better, worse or about the same as that of senior managers in the private sector. If there is a difference, why?

It is too often argued in some left-thinking circles that the public sector should be immune from criticism because, however fair and accurate, criticism will fuel antagonism towards the public sector and thereby enhance the public perception of the private sector.

This is nonsense. The toleration of the inadequate management in senior public sector jobs does a grave disservice to the public sector itself.

Perhaps the most significant difference between the two groups is that senior private sector managers are, in general, more competent than their public sector counterparts and that this difference is triggered by the bottom line effect. The stock market measures the performance of UK companies. Today’s profits warning may well be the harbinger of tomorrow’s dismissal.

Managerial performance is measured to a greater degree in the private sector and the very act of performance measurement brings greater pressure on private sector managers to perform or else.

To take just one expensive example, the sanguine response of NHS trusts to anticipated over-spends is a cause for concern. The public perception is that senior NHS managers are confident failure to operate within planned budgets will have no serious consequences for them. Shoulders will be shrugged, Jeremy Hunt will be blamed and life goes on.

We have even evolved a special term for the phenomenon, the revolving door, in which a senior manger is labelled in the full glare of unwelcome publicity as a bungler, they endure their unwelcome hour in the spotlight and then disappear as suddenly as they appeared, not into oblivion but simply into another public sector cushy number.

Sadly it is not difficult to detect in many reports of failure in the public sector organisations a detached insouciance about the root causes and the consequences. Budgets are regarded as a box to be ticked rather than as a limit not to be exceeded. The reason for this show of fine careless rapture is that failure to achieve targets is neither here and the business will go on as usual with bills for deficits being passed to the taxpayer for settlement.

It is worth noting that the performance of too many senior managers in the private sector is marred by an unseemly combination of dishonesty and greed as exemplified by the financial crisis of 2008. The memorable failures in the private sector in the past 10 years occurred mainly but not solely in the financial sector, and many of the failures did not stem from bungling. The guilty knew exactly what they doing.

A quango is defined as a body which has a role in the processes of national government, but is not a government department or part of one, and which accordingly operates to a greater or lesser extent at arm’s length from ministers. More simply, this means a national or regional public body, operating independently of ministers, but for which ministers are ultimately responsible. So, if ministers are ultimately responsible, what exactly are the responsibilities, if any, of quango bosses? The short answer is that these are cushy numbers created to ensure that a motley crew of failures, deadbeats and bunglers are enabled to carry to pensionable age in conditions of elegance and affluence.

Who selects the selectors? We need to get to the root cause of the significant number of senior managerial failures and we might start by asking who decided to appoint them and why.

It is easier to answer this question for the private sector than for the public sector and for quangos. The selection of senior managers for private companies is a matter for the board representing the shareholders and the board has to live with the consequences of their collective decisions. The public may not approve of some choices but board members and shareholders will be influenced by the performance of the company, its profitability and its share price, and other considerations will not apply.

It is interesting to note that the selection of senior managers in the public sector is much more opaque than in the private sector. Who, exactly, decided that Lin Homer should be allowed to proceed from disaster to fiasco to shambles to chaos? Are those responsible ever held to account? It would seem not. It is self-evident that the selectors bear significant responsibility. They are entitled to praise when their selections succeed, but equally they should be held to account when their choices fair. Are they ever held to account?

Quis custodiet ipsos custodes. The Romans worried about who should guard the guards. In our time, we need to worry about who appoints the senior managers. Who appointed, first of all Chris Smith, and then Sir Phillip Dilley to chair the Environment Agency? Who was responsible for appointing Lin Homer, not once, not twice, not three times but on four occasions to senior public sector jobs for which she was clearly unfitted? Where are the policies designed to pressurise the selectors for their frequent failures?

The growth in the number of public sector chief executives has been one of the great growth areas of our time. The awarding of the title CE tends to be less widespread in the private sector, if only because the recipients want the associated financial benefits, and company boards tend to be more cautious in these matters. In the public sector, the absence of effective controls means that senior managers may, if so inclined, direct much of their energy to advancing themselves rather than promoting the purposes of the organisation.

A contributory factor to the generally patchy performance of the public sector may well be the absence of any kind of control over the proliferation of chief executives. The very title of chief executive has become seriously devalued. Town halls are worthy of special comment in this regard. The time was when decisions were taken by unpaid elected councillors and implemented by the town clerk and council staff. Not so now. All local authorities employ chief executives and senior managers, and this raises the question of who is doing the deciding and who is doing the implementing?

Those in a position to do so to must be urged tackle the problem of poorly performing senior managers by implementing measures along the following lines.

* Start by weeding out the more obvious bunglers – go for the low-hanging fruit.

*Abandon the practice of appointing failed politicians to senior managerial jobs in the public sector.

* Tighten up on the practice of allowing politicians to sell their insider knowledge of the Whitehall machine when, for whatever reasons, they leave government.

* Use just one selection criterion in making senior management appointments: proven competence.

* Dispense with the policy of keeping people in jobs for which they have demonstrated their incompetence. Abandon the languid approach of Sir John Chilcot and move promptly to sack the bunglers.

* Abandon the well meaning but mistaken policy of using the criterion of positive discrimination when making appointments. This approach simply replaces one form of discrimination with another, with unfortunate consequences.

* The only test of competence is performance against clear, transparent and high standards

* Ban the use of bonuses in the public sector – good performers get to keep their jobs, and poor performers are shown the door, Which will not be a revolving one.

* Designate 2016 as the year of ensuring that those who occupy the top jobs are up the required standard.

* Set up a procedure to recover redundancy payments and to cut pension arrangements made by senior managers to the benefit of senior managers. Set up procedures to ensure that these lavish arrangements cannot be made in the future.

*Urge David Cameron to stop wasting time reprimanding his the leaders of other countries for their toleration of corruption and use the time saved to get a grip on the problem that is within his control – namely, the mediocre performance of some senior managers in the public sector and in quangoland.

*Urge shareholders to take rather more interest in the performance of senior managers in the private sector – the failures are squandering their money.

* Encourage, embrace and protect the whistle blowers. The insiders know all about the inadequacy of management but fear for their future if they speak out. Competent managers have nothing to fear.

* Check the potential of managers in lesser jobs before appointing them to senior jobs.

* Be careful about the claims to expertise of business academics in our business schools and management development schools – these establishments can and occasionally do employ fugitives from the more demanding world of business. Beware of management fashions, especially those advocated from the cushy confines of academia.

* Consider appointing a senior independent figure as our national firing tsar, to identify and winkle out the inadequate performers.

At all times. it should be made clear that these actions are not being taken of any spirit of vindictiveness  but to ensure that the management of the public sector is in safe hands.

As long as we appoint failed politicians to jobs, as long as we allow nepotism to flourish, as long as we allow senior management in many public bodies to set their own reward packages, then we are asking for trouble and we ought not to be surprised when we get it.

This article was first published in Tribune on February 9, 2016


Author: holdenforth

50 years in management - mostly as a sharp-end man. Occasional contributor to Tribune.

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