David Cameron’s second term as prime minister will bring new challenges, many of which are familiar to FTSE 100 chief executives. First, past performance is not an indication of future results.
When the FTSE 100 celebrated its 30th birthday last year only 30 companies remained from the original index. Only 19 had never dropped out. David Cameron needs to learn that lesson.
The two-party political system is dead: Labour and the Conservatives scraped just 67% of the vote, the Liberal Democrats were all but destroyed, UKIP secured the third-largest vote share, the SNP are the third-largest party and Labour have been thrown into a period of navel-gazing.
Cameron cannot assume that the Conservatives are safe – the EU referendum, if handled poorly, could jeopardise the unity of the party, and there is still a weakness with regards to an overarching vision.
Second, FTSE 100 chief executives spend their time wisely. They look at where they can make the biggest difference, and where profits will be highest from the investment of time and resource. It was a lesson that David Cameron took on board in 2010: he knew that Blair’s biggest mistake was not to make sufficient progress after his landslide victory of 1997.
To make the most of this second term Cameron cannot afford to let this be a period of ‘bedding-in’ early reforms. He must decide what this government is to be known for: neither a message of economic competence nor having resolved the EU question is likely to be enough to secure a third term.
Third, the most successful FTSE 100 chief executives take the business with them; they understand that employee engagement has a significant impact on performance. For Cameron, productivity will depend on enacting the manifesto - the Queen’s Speech contained 24 bills for this year alone – and to do that he needs his MPs.
Yet, this is an area where David Cameron has often struggled. Well before 2010 there was complacency regarding backbenchers. Parliamentary Party meetings were infrequent – maybe four times a year – and that trend continued. Now with a working majority of only 12 he will need to court every MP, even the ‘awkward squad’.
Work has already begun on this. The Prime Minister is in discussions with the 1922 committee (which represents the parliamentary party), on how to work more effectively with backbenchers. Cameron also needs to do the small things, such as noticing when an MP does well on something and letting it be known that it is appreciated. David Cameron would be wise to make this a priority for one of his inner circle.
Finally, chief executives know that they aren’t the story; they trust their team and foster autonomy. The average tenure for the current FTSE 100 chief executive cohort is 5.25 years, almost identical to that for post-war prime ministers. Cameron has to recognise that he is only a temporary steward of government and the Conservative Party. He must learn to place increasing trust in his executive team and prepare for succession.
Cameron has already declared that he will not serve a third term, which means he will probably resign towards the middle or end of 2018. This gives enough time for a successor to be elected and to establish their credentials before a general election.
It will, however, be hugely distracting. Work has to be done now to ensure the entire ministerial team are aligned around an overarching goal, against which they (and the public) can measure what they are doing, even amongst the disruption.