Newspaper article The Evening Standard (London, England)

Bosses Stumped by a Changing World

Newspaper article The Evening Standard (London, England)

Bosses Stumped by a Changing World

Article excerpt

Byline: Anthony Hilton CITY COMMENT

A SURVEY a few months ago sought to gauge how confident executives were that their firm had got the right strategy to survive the recession.

Below board level, the results were pretty bleak. Fewer than half were convinced the plans handed down to them were on the right lines -- and even when they were, they doubted whether they could be effectively implemented. But in many ways, it was an even bleaker picture in the boardroom, where the strategy originated and where they are supposed to know what is going on. About a third of directors had similar doubts.

These findings have just been echoed in a survey sponsored by Alium Partners, a consultancy that supplies interim management. Such surveys can be self-serving, given that external consultants have little to gain by saying that their potential clients have all the skills they need, but it nevertheless makes some very valid points about the ability of management to react appropriately.

The problem is that 15 years of expansion created a mindset that focused on growth, acquisitions, dynamic markets and easy finance. At the same time, management has become younger, de-layering made management teams much slimmer, and the passage of time meant that those with experience of downturns retired or moved on. Basically, no one under 40 had relevant experience of a recession -- and a lot of management teams are under 40.

The turmoil has badly undermined trust and confidence. In most companies in the good times, there was a close alignment between chief executive and finance director, both working to the same rules and sharing the same beliefs. But the financial crash, the drying-up of money and the complete focus on balance-sheet strength have driven a wedge. Chief executives, while they may not always admit it, wonder how the finance director allowed the business to get into this mess. …

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