Bonuses of contention

The British would accept high executive pay if they could see the country benefitting.

by Patience Wheatcroft, business and City editor of The Times
Last Updated: 31 Aug 2010

Business leaders just want to be loved. There they were, gathered together at the QE2 Conference Centre in London to help Gordon Brown in his quest to make Britain more enterprising, and one of the overwhelming messages to emerge was that they did not feel appreciated. The session, theoretically devoted to lessons in building a global business, ended up providing material that might have had psychologists signing up the patients for a long course of therapy.

It would have been hard to have assembled a more high-powered collection of speakers than those who had decided it wise to accept the invitation from the Chancellor to join him at the end of January. Between them, they could probably turn a back-of-the-envelope idea into a global business in a matter of months.

Sir Terry Leahy has overseen Tesco's phenomenal growth, so that more than half its stores are now outside Britain. Paul Walsh, chief executive of Diageo, runs a business that sells wine and spirits around the world.

Arun Sarin, the newly installed CEO of Vodafone, is global business personified, a smooth combination of Indian and American heritage, now heading a company with world-beating ambitions. Together with JP Garnier, the boss of the pharmaceutical giant Glaxo-SmithKline, and Eric Schmidt of internet phenomenon Google, they made up a starry panel.

They had valuable market insights to offer and - given the identity of their host - they also thought it worth making predictable pleas for lower taxes and less regulation. But what really hampers British enterprise, they seemed to agree, was a culture that did not properly value the contribution that business makes. This deterred people from seeking a career in commerce, whether in large, established organisations or through starting businesses of their own.

Historically, it is true that snooty Britons looked down on the business world. To refer to someone being 'in trade' was to deliver a sneering putdown. Educated people headed to the professions rather than commerce.

Yet is this still the case? Management traineeships with the country's major companies are today as sought after as training contracts with top legal firms.

British attitudes have warmed towards business, but, according to those with experience of working on both sides of the Atlantic, they still differ markedly from the American embrace of the entrepreneurial ideal. Naturally, the panel at the Enterprise Summit put some of the blame on the media for propagating an unflattering view of business. Certainly, there have been numerous column inches berating the salaries of some executives, and this obsession with fat-cattery has sometimes seemed to owe as much to jealousy as a dedication to see fair play for shareholders. But the media has been right to point out the failings of a system that often appears to dole out huge rewards for failure.

If business has had a bad press in Britain, some of it has been well deserved. Enron and WorldCom erupted in the US, but affected investors around the globe. Now the Parmalat scandal is unfolding in Italy, a multi-billion pound collapse of a business that was not dealing in such complicated concepts as energy trading or telephony, but in milk and yogurt. And Britain has corporate scandals of its own: Carl Cushnie, once a business hero, is on trial after his Versailles finance firm collapsed in suspicious circumstances, while the Bank of England itself is defending allegations of malpractice over its treatment long ago of BCCI.

The British media would be at fault if it did not cover these stories.

But perhaps it is keener to criticise than to lavish praise. Business people berated for their bonuses wonder why no-one is aggrieved at the earnings of pop stars and footballers. They might feel it unfair that a bit of fancy footwork from a footballer can be greeted with paeons of praise from the commentators, whereas it is taken for granted that a CEO will deliver the profits whatever the opposition.

Moaning about such unfairnesses, however, will not change public attitudes. A more positive suggestion emerged from the Chancellor's get-together.

In America, there is little objection to financial rewards that are far higher than those in the UK, suggested one speaker, because some of that money is very publicly donated to good causes. Those who make it to the top in business gladly endow their old colleges and share some of their rewards with various charitable endeavours. This wins them some of the public plaudits that their UK counterparts appear to crave.

This is not to say that British businessmen don't give relatively generously; merely that, being British, they tend not to boast about it. Perhaps they should change their approach and broadcast the fact that their success, as well as that of their company, is to the country's benefit. That might even persuade the tabloids to lionise leaders rather than pillory them as fat cats.

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