The Cult of the Leader by Christopher Bones

Author:Christopher Bones
Language: eng
Format: epub
Publisher: Wiley
Published: 2012-02-13T05:00:00+00:00

Part Two: The Solutions

Chapter Five

The Manifesto for a More Authentic Business

Some two or so years after the global financial crisis and the revelations of excess at the top of some of the world’s most powerful financial services organizations, it would seem that not much has changed in the fundamentals of how business leaders are doing business. Excessive rewards continue to dominate the headlines and there has been no systematic and comprehensive adjustment to reward expectations or mechanics at the top of big business. Even in banking where bonus systems have been reviewed, little in reality has changed for those in receipt of significant levels of personal reward. As North America and the EU make painful adjustments to public expenditure and as personal and corporate taxation rises in many countries those who received most and who continue to benefit most from state intervention to prop up the sector now complain most about the personal and organizational impact of clearing up the mess they got us into.1

Despite the words of contrition uttered after the collapse of some of the major banks and the near collapse of the system it would seem that business, and big business in particular, has learned little and has changed even less. If business is to re-build its reputation then there are actions to be taken not just by boards and executive committees but also by leaders in civil society. This book is not focused particularly on the public policy agenda, but there is a role for governments in working with business. The changes I am proposing can work to benefit all stakeholders, but only if legislators address some significant issues of public policy. The manifesto that follows addresses the changes to leaders and leadership thinking that has to happen in business if it is to be a positive force in the 21st century.

There is, however, a clear demand for political leadership in all countries to collaborate in changing the dynamics of the market economy. The collaborative approach here is important not just to deliver a better outcome for society as a whole but also for the current owners and employees of businesses today. If only some countries and economic groupings react then the endemic short-termism engendered by reward mechanics that drive business leaders will drive the wrong sort of change. We will see movements of capital ownership structures outside the well-regulated markets to jurisdictions where investor protection is less and where behaviour that destroys value finds no criticism or even exposure with far less onerous rules on disclosure.

Having said this, there is an overwhelming case in my view for a significant reform of corporate governance and ownership structures that can give the power back to the real owners of the capital employed in an enterprise. If we are to nourish and sustain the operation of a positive market economy then the public policy agenda needs to embrace the following:

Promote civil ownership of capital, not social ownership. By this I mean that we have to recognize that the market is the most effective mechanicism for wealth creation for society as a whole.

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