UK: Heller on management - A quick return to square one. (1 of 2)

UK: Heller on management - A quick return to square one. (1 of 2) - Robert Heller condemns the Thatcher era for encouraging managers to look to the short term and leave the long term to look after itself.

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Last Updated: 31 Aug 2010

Robert Heller condemns the Thatcher era for encouraging managers to look to the short term and leave the long term to look after itself.

Did the deposed Prime Minister create a management renaissance on which her successor can hope to build? Or did the managerial economy, like the inflation rate, go back to where it was when she started in 1979? The first and easiest answer is that the quality of British management is much improved. To which the equally obvious reply is: I should hope so. If management had not improved, after 11 years and the constant infusion of new, ambitious and better trained talent, and in an inreasingly competitive environment, that would be an economic miracle in reverse.

But the rise in British management standards would only be miraculous if it had outstripped, or even promised to outstrip, the standards and performance achieved elsewhere. Only the most ardent of Thatcherites would claim this to be true. The car industry, as usual, can stand as representative of the whole. In some respects Rover Group has performed excellently, rising from no-hoper to effective competitor, if in a narrow sector of the market: it fits inside a parent, British Aerospace, which is a third of Fiat's size. To put that in still more alarming perspective, Fiat has two thirds of its home market, 11% of Europe, and as for the world, forget it!

In those cases (by no means the majority) where Britain is fully competitive by world standards, its status in world markets, with a few exceptions, brings up the rear: too few competitors lose sleep wondering what the British will do next. Take Lucas Industries, an enormously improved company. It is a third of the size of Germany's Robert Bosch, a direct competitor. If Lucas were to lead Bosch in performance, that too would be an economic miracle.

According to Andrew Lorenz in The Sunday Times, Mrs Thatcher gave industry "a chance to catch up with foreign firms" by the "shock treatment" of recession, which fired industrialists, in Sir Christopher Hogg's words, "to get their house in order"; abandoning corporatism and intervention in favour of privatisation and destroying the power of trades unions; confirming the responsibility of managers to manage; providing fiscal incentives for managers; and deregulation over a wide front, from exchange control to financial services.

Much of this fivefold thrust was overdue. The overriding error, however, was to assume that the necessary was also sufficient. Cutting back on jobs, products and plants raises productivity - but may weaken competitive potential. Changing ownership from the state to shareholders may be a platform for more effective management; but it does not guarantee a bigger and better bang per buck for the community.

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