Comment: So, who is worth the most?

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The Independent Culture
WHY IS it so difficult to find someone to become the chief executive of Barclays Bank? You might imagine that this was one of the top jobs in the country, but you would also imagine that there were plenty of people here who could do it. Do we not have a comparative advantage in financial services? Surely, somewhere in the City, there are people who know how to run banks.

Yet Barclays felt it had to look to America - and pay top dollar - to fill the job, only to find out this week that the poor chap had a dicky heart and had to resign the same day that he started. Back to square one.

But of course this is not just a problem for Barclays. Hardly a day passes without the news of some chief executive being sacked, which of course creates a vacancy. At any moment there are a string of companies with big holes at the top that have to be filled and no guarantee that the person hired will last the pace. If you are lucky, you get about two years to prove you can perform, and if you don't you are out.

This is an extraordinary contrast to the situation 10 years ago or more, when there was much greater stability in top jobs. Succession was, usually, pretty orderly. Top managers were paid much less, but they had reasonable security. Not everybody could get the top job, of course, but competent hard workers who kept their noses clean could expect some kind of board post with all the trimmings that went with it. Why is everything so different now?

Three things have changed, the first two of which have already received a lot of attention; the third, however, is something we have hardly begun to understand.

First, the job of running a big company has become much more difficult. Ten years ago businesses, even giant multinationals, were pretty stable. You knew what you were making. You knew who your customers were. You knew who your competitors were. Now you know none of this. Your present products will be dead in a couple of years. Your customers may be entirely different. And some company you have never heard of from the other side of the world can come along and wipe out your business - or take you over. Getting people with the breadth of skills - the wisdom, judgement, culture, capacity for hard work and charm - is difficult. Good chief executives are an odd collection of people.

Secondly, companies have become global, but managements have remained largely local. It is therefore often difficult to find people with global experience within existing managements to run them. Not many people qualify - and, when you find someone who seems to fit the bill, it may be very hard to lure them on board. Result: vast pay packages, which themselves may destabilise the talent below.

But all this has been known for some years. What is new is the way that what we think of as a top job - the chief executive of a big company - is no longer really a top job. There are much more attractive - and much more remunerative - ways of earning a living.

If you want to make really big money the last thing you do is to work for a big company. For example, take the man ranked in yesterday's Independent as the banker's banker, the British banker most admired by his peers: it was Sir Brian Pitman of Lloyds. He spent a lifetime clawing his way up the bank's hierarchy and has turned what was a very ordinary bank into an immensely profitable one. In terms of market value it was at one stage last year the biggest bank in the world - I make it number three at the moment.

But Sir Brian is not in the new Sunday Times list of the richest 1,000 people living in Britain. The compilers reckon he may make it next year - his shares and options will need to be pounds 25m to do so. That would put him in the same league, they calculate, as David Beckham and Posh Spice and way behind an actor such as Sean Connery.

If you look at who is making serious money in Britain, it is not the people who run the big companies. It is people who start their own businesses or people who have specialist skills in things such as sport, entertainment or writing. Aspirant writers might like to note that Ken Follett (thrillers) and Delia Smith (cookery books) both make the list ahead of Sir Brian.

People with specialist skills have long commanded good incomes, and people who start successful businesses have often made fortunes. What is new is the scale of the fortunes of the highly skilled and the speed and number of new businesses that are being created.

The result is that ambitious young people do not look to big business. If they have specialist skills, they develop those. If they look at business at all, they look to small business. Maybe first they go to a management consultancy - to the Andersens or the Pricewaterhouse Coopers - to learn the craft. Then, maybe, they have a spell in a big business. But the best will already be casting around for something that they can own themselves.

This is having a profound effect on the job market at the top because the supply of good people available to run big companies is being continually drained by new business start-ups.

But, most important of all, small companies can now compete for the good managers. Here is the choice. Case one: a good manager can go to a top company and get a very good salary, a car and so on, plus some options which may, if things go wonderfully well, be worth a few hundred thousand.

Or - case two - he or she can go to a small company where the salary is smaller but where there is the prospect of owning 20 per cent of the business. If things go equally well the company will be floated and the shares worth millions.

Or - case three - he or she starts a business, owns 100 per cent of it and joins the list of the country's 1,000 richest people with pounds 25m or more when it is floated.

We are in the middle of an entrepreneurial revolution. Ten of the new names in that 1,000 list were Internet millionaires. Of course there are risks in starting businesses. But there are also risks in working for big companies. In pure money terms, the glittering peaks of small businesses have become more attractive than the peaks at the top of big companies. More importantly, the risk/reward ratio has shifted in favour of the small.

Finally, there is the fun factor. Anyone who reports on business affairs will come to know people who run big businesses. Viewed from the outside it is an extraordinarily grinding job: pressure from shareholders, pressure from competitors, pressure (if things are going badly) from bankers. Do everything right, and, if your business happens to be in the wrong corner of the commercial forest, you will still lose.

By contrast people who have marketable talents - be it acting, writing or whatever - will know that they are being paid to do what they enjoy doing. People who start businesses do so because they enjoy it. The money comes earlier; the fun comes straight away.

And there is a problem for society, not just for Barclays Bank and the other companies finding it hard to get the right person to run them. If the very best people won't work for large companies, how on earth will they continue to supply us with the highest quality goods and services? Paying yet more for chief executives may attract some talent, but that will lead to even greater social strains than we have at the moment. The giant question for our giant corporations seems to me to be this: how do we make it as much fun to run Barclays Bank as it would be to become an Internet millionaire or a successful cookery writer? Until they figure out an answer, they will find it ever harder to fill their top jobs.

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