Consultants Are Dragging Us Down; CITY COMMENT
Byline: Anthony Hilton
It was possible in the 1970s to correlate Britain's economic decline with the growth in numbers and power of accountants and the influence their profession had in making an entire generation of management risk averse. then came a surge of liberation as management started to manage again and business changed, or certainly public companies changed out of recognition.
Now though we are again becoming becalmed. the tidal wave of corporate governance and the committees it has spawned has turned too many boards into overpaid compliance officers, who have either stopped thinking altogether or outsourced that function to consultants.
what is the point of a body of (usually) men who see their job as following the rules, not providing leadership and direction for the business? How long before we can again correlate Britain's business decline with the growth and influence of consultants? as an example it seems a reasonable observation that a large number of the problems which arise over management succession and executive pay would be avoided if boards took more interest in the process. If, for example, a board clearly mapped out its strategy for developing the business in the coming years and took the trouble to argue it through with investors and the rest of us and gain acceptance for that plan.
this would give a yardstick for what was meant by performance, and how it might be measured. It would then be much easier, using that blueprint, to decide what sort of chief executive the business needed and how much the job was worth.
Instead everything is done the other way round. the consultants decide (or, strictly speaking, recommend) how much the company is going to have to pay -- the so-called market rate -- and then they work out what the executive should have to do to justify that amount.
where the company is headed ought to be a fundamental decision of any board interested in providing leadership for its organisation, not some incidental by-product of a process devised by remuneration consultants. …