Anthony Hilton: What's the point of Davos if you can't get in the lift and bump into Mandela?

 

The World Economic Forum in Davos was great about 20 years ago when you would get in a lift and find that the tall elegant upright guy sharing it with you was Nelson Mandela, or take the only spare stool at the counter to find you were alongside the US Treasury Secretary Robert Rubin.

In those days most of the interesting meetings were relatively small seminars over breakfast, lunch or dinner, where you did actually get to meet and talk to seriously important people you would normally not get close to. And something in the mountain air meant they often said what they thought rather than what they thought they should say.

That's all gone now and it is such a circus there is no point in going. Those in attendance are now given electronic passes which rank them by their importance and restrict where they can go, so the high and mighty are totally shielded from the low life. The great and the good on the panels spout empty bromides which demonstrate either how insensitive they are to what is happening outside their cocooned world or that they are prisoners of group think. And the atmosphere more than anything is one of uncomfortable self-importance and smugness, which seems to grow as the attendance by genuine A-list players goes into decline.

They, like me, probably takethe view that the pre-Davos discussions are much better value that the real thing.

At one, organised by Editorial Intelligence in London a couple of weeks ago, the American ambassador said the major issue facing the world was one of fairness; thefinance director of Rio Tinto said he was worried at the amount of political uncertainty and the possibility of new people in charge in half the countries in the Middle East, several of the countries in Europe, in the United States, and, most of all, in China. Someone else said we had not even begun to cope with the implications of the decline in western power and the rise of Asia, and the Financial Times's Martin Wolf said that the collapse of the euro would mean a decade of pain, even in Germany.

All that for the cost of an Oystercard fare. Who needs to go to Switzerland?

Odd that the Co-op won't co-operate on huge deal

The week kicked off with a visit to The Foundation, a management consultancy where I am on the advisory board and which focuses on helping businesses understand their customers better. While there its boss Charlie Dawson whipped out a copy of the John Lewis partnership agreement, which was in the news because the Deputy Prime Minister Nick Clegg had just said he wanted more business to be run on John Lewis lines. It was part of the Lib Dem antidote to the crisis in capitalism.

It would certainly be a different world. The number one article in the constitution says that the ultimate purpose of the partnership "is the happiness of all its members through their worthwhile and satisfying employment in a successful business". Then it has a paragraph about dealing honestly with customers and "securing their loyalty and trust by providing outstanding choice, value and service," followed by a declaration that it will conduct all its business relationships "with integrity and courtesy and scrupulously honour every business agreement".

It seems a long way from the world of finance and investment banking, as indeed do other variants of ownership such as mutualisation, where the business belongs to the customer rather than the employees. Nationwide, Royal London and NFU Mutual are examples. And, separate again, there is the Co-op.

Where John Lewis stands out though is that it is the only one which seems to have got its governance right and which has been consistently well run. Too many mutual boards look like self-perpetuating cliques, where the benefits of employee or customerownership are negated by poorperformance.

This accountability issue could also yet bite the Co-op, which is currently in negotiations to pay well over £1bn for 600 branches from Lloyds, merge them into its Co-op bank and create a new force on the high street. It is a chunky deal, more than doubling the size of Co-op bank, and it will pose an unprecedented management and financial challenge for the organisation.

Now if the Co-op was a public company listed on the stock market it would have to seek its shareholders' approval to be allowed to do something of this size. But under the Co-op constitution the directors do not have to ask the owners' permission.

And somehow that does not seem quite right, whatever the constitution says. Day-to-day management issues obviously can't be put to a vote. But this Lloyds acquisition and its aftermath could be a make-or-break deal for the Co-op, a brilliant coup or a great disaster. The least management can do surely is have the courtesy to ask the owners in advance if they are happy for the board to bet the farm.

In the boardroom pay race, all must have prizes

The week has been dominated by pay. The Business secretary Vince Cable's proposals to curb it, and the uncertain reaction from those institutional shareholders whose job it will be to do the curbing. I have not much to add other than to repeat what I still believe is the best description of what goes on in the boardroom, and therefore why it may be impossible to stop.

The father of UK corporate governance, the late Alastair Ross Goobey, once made a speech in which he compared the setting of executive pay to the caucus race in Alice's Adventures in Wonderland. There were no obvious rules. There was no proper start. Participants began running when it suited them. There was no official finishing line either, but after about half an hour the race was deemed to be over. When asked who had won, the judge said they all had.

Therefore they must all get a prize.

And Alice, who till then had been a bemused onlooker, was the one who had to provide the rewards.

a.hilton@independent.co.uk

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