In My Opinion - Chartered Management Institute

Article excerpt

Chartered Management Institute Companion Kevin Beeston, executive chairman of Serco Group, argues for a positive kind of corporate governance.

There is too much of the wrong sort of corporate governance. There's a real danger that risk-taking and innovation will be stifled by over-prescriptive controls that leave companies unresponsive to market needs and public services hampered by red tape.

In the private sector, the reaction to too many corporate scandals has been ever-increasing governance. The same applies in the public sector, where some ministers have recently said that new legislation such as the Freedom of Information Act will make it impossible to govern.

So how can we be certain there is a balance between prudence and entrepreneurialism and yet ensure the golden goose is free to produce golden eggs? At Serco we face this issue daily. We've developed a decentralised approach that allows us to be responsive to the needs of our customers but within a clear framework of control that stands up to scrutiny by our stakeholders.

People often ask how a company like Serco can balance a portfolio of more than 600 contracts in 30-plus countries. It ranges from running Docklands Light Railway in London and being responsible for children's education in Walsall through to flight control centres in many countries around the world - and yet we do it day after day and win awards for it.

The answer is to embrace the best aspects of corporate governance and minimise the burden of the rest. We believe that managers should be able to spend 90% of their time managing and 10% reporting, and not the other way round. So does this mean that we're taking undue risk?

Quite the contrary. Our own internal research, Good People Good Systems, asked some of our most senior managers why the same people could produce better results in the private sector than they were able to produce - often in similar jobs - in the public sector.

The response was wide-ranging, but one prominent aspect was the appetite for risk - taken within a tightly defined management framework, which places much emphasis on personal accountability. So what does the model look like?

It is necessary to have a strategic plan at every level of the business, and the same applies whether you are running a hospital, a prison or a manufacturing plant. This plan needs to consider aspects such as the ability to grow and to sustain that growth; operational performance; safety performance; leadership and staff development; community involvement; risk management; and key relationships.

This doesn't mean that one plan will fit all. If you're to fire the enthusiasm of managers, the governance model must accommodate different market needs and encourage entrepreneurialism and balanced risk-taking. We treat each contract as a micro plc. …