UK: EDITORIAL - POWER AND THE PEOPLE.

UK: EDITORIAL - POWER AND THE PEOPLE. - The cry that one or other corporate emperor has no clothes has frequently been heard over the past few years. In some cases, it has been the cue for a bear-raid on the company's share price; on a distressingly larg

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Last Updated: 31 Aug 2010

The cry that one or other corporate emperor has no clothes has frequently been heard over the past few years. In some cases, it has been the cue for a bear-raid on the company's share price; on a distressingly large number of occasions, the small boy well-distanced from the emperor's advisers and flunkeys has been right. Martin Vander Weyer's article, When the Wheels Come Off (p30), examines this phenomenon.

Many of the fallen companies about which Vander Weyer writes had successfully taken risks to achieve their high growth and equally high profile. Their leaders had been perceived as gutsy players who had the intuition to make the right decisions at critical stages in their companies' development. Those in their orbit chose to believe that such entrepreneurial decisiveness should neither be restrained nor constantly monitored.

However, these leaders' previous success had led them to underestimate the level of risk that their growth strategy entailed. When problems struck those businesses, the reaction time was too slow and the reaction itself was often totally wrong. Those who had supposedly been so effective when the tide was flowing their way, proved incapable of dealing with a reversal of fortune. (As Sir Peter Parker points out in his piece on leadership (p5), there are good attacking generals and good retreating generals, but generals with a two-way stretch are exceptional). Worse still, in several cases action was taken where the reward was little more than saving the face and neck of the chief executive, while the risks spiralled exponentially.

But if we can see that the emperors had no clothes, it is less clear why their subordinates failed to tell them. Surely those managers closer to the coalface could see for themselves that the stocks were unsold, that the customers weren't happy or that the hotel rooms were empty? The simple answer is that they were powerless to do anything about it - the concept of empowering staff had been overlooked, perceived as inappropriate or ignored as irrelevant management-speak.

Those sceptical about empowerment suggest that it reduces the impact of strong management and works against entrepreneurial flair. Such cynics need to read Anita van de Vliet's article on the John Wood Group (p54). Under Sir Ian Wood's leadership, the group has been transformed from a small family fishing business to the UK's largest indigenous oil services company. Wood's analysis of the group's success is littered with the philosophy of empowerment - 'People like to be involved in discussions, in taking decisions' - while his managing director refers to the fact that giving his managers real responsibility means that the subsidiary companies grew more quickly, not less. It is cheerfully acknowledged that mistakes can be made - a key tenet of empowerment; what is important is that these mistakes are recognised, at which point they may be turned to some good.

A further interesting feature about the Wood Group is that the opportunism of its successful past, particularly in acquisitions, is no longer viewed as the key to its future growth. The group's approach has, for the time being, become more considered as it has learned what it is good at and where it needs to expand.

Empower staff and take the risks that suit the business rather than its managers. Those who heed this advice are less likely to find themselves exposed in front of a large crowd.

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