Remoteness that characterised a sad decline


Lord Weinstock has chosen the medium of the Financial Times for a long and reflective series of interviews to mark his departure from GEC after 33 years at the helm - well, near-departure anyway, for he retains the curious title of honorary chairman emeritus. There's not much in there that's going to surprise close observers of this clever and resilient industrialist, except perhaps this - the admission that he never visits factories. Lord Weinstock justifies this extraordinary omission on the basis that if he visited one plant every half-day, he could not get round all GEC's plants in a year. The effect would be minimal anyway, he claims, since people would know he wouldn't be back for quite a while.

Perhaps Lord Weinstock is just being a little more honest than his peers in disclosing this apparent lapse. Most busy executives rarely have time to visit the factory floor. Certain of them have actually made a virtue of it. Lord White, the late chairman of Hanson America, liked to boast that in all his years at Hanson he had never visited any of the businesses he controlled. Indeed he would have regarded it as a failure to have done so, for to visit a business is only to allow yourself to be polluted by excuses as to why things cannot be done. Much better, he always used to say, just to set a target and hold management to it.

Though he wouldn't put it in quite that way, this was plainly Lord Weinstock's way too. He ran his company via a book of numbers, a set of "ratios and statistics". As a way of keeping his company out of financial danger, and of delivering solid, if unspectacular, value to shareholders, it plainly worked. But there is also arrogance and a certain bankruptcy of leadership in a managing director who thinks it not necessary to visit his places of production. Such management remoteness from the workplace may not have been a cause of Britain's post-war industrial decline, but it certainly seems reasonable to see it as symptomatic.

Of course it is not possible for a man in Lord Weinstock's position to get round all his factories. But to visit none? The secret of good management in a large group of companies is not so very different from that of a small company, most successful entrepreneurs will tell you. It is to be involved with the product and the people who make it and sell it, to demand the impossible and to instill in employees that sense of enthusiasm and purpose that helps them meet those demands. Is that really possible from a darkened room in Stanhope Gate? Of course it isn't. Let's hope George Simpson, Lord Weinstock's successor, visits a few more factories.

Sorrell on target for millions

When Martin Sorrell's breath-takingly rich pay package at WPP was finally approved in June last year, after some adjustment by outraged institutional shareholders, the company said it was very unlikely the full amount would ever be paid. The targets were just too demanding, said both Mr Sorrell and the chairman of the remuneration committee.

Eighteen months on they don't look quite so demanding. The WPP share price topped 250p yesterday, well above the 230p target price that delivers Mr Sorrell his pounds 3.6m initial payout, not counting his already princely salary, bonuses, pensions and the like. Sure, the shares have to maintain their target levels for 60 consecutive days, and yes, the company must outperform the market, but both requirements look within reach.

Mr Sorrell has to hit 265p to get the next tranche of shares and then 304p by September 1999 to get the full whack of about pounds 27m, of which pounds 14m at least will be in the form of free shares.

Will he go all the way? Analysts are beginning to think so. Advertising spend was up by between 6 and 7 per cent in 1996, but WPP, following Mr Sorrell's restructuring efforts, saw its revenues climb by nearly 9 per cent and margins widen to more than 10 per cent. Pre-tax profits should grow to pounds 185m next year. If investors were willing to give WPP the same measure of support they award to the sector leader, Abbott Mead Vickers - which trades on more than 20 times next year's earnings - the shares would already be high enough for Mr Sorrell to get the full package.

That the shares are still on a rather subdued 16 times earnings is a measure of the City's caution at backing Mr Sorrell a second time. He's already lost one fortune. Many are still furious that he's been given the chance to rebase and make himself a packet merely by returning the company to where it once was. To be fair on Mr Sorrell, he has managed, through some energetic cost-cutting and some excellent client prospecting work to get the show back on the road.

There is still a chance the shares will continue to underperform, depriving Mr Sorrell of his pile. But with two pretty decent years for the economy and advertising ahead of him, and with most analysts projecting better- than-average growth at WPP, the chances he will see his way into the serious money have to be rated as reasonably good and getting better. If these are tough targets, it makes you wonder about the softer ones enshrined in many an executive long-term incentive plan.

De Beers casts Russia stony looks

News that Russia is set to sign a deal with the Central Selling Organisation will be met with scepticism by De Beers, the South African minerals giant which controls the diamond sales cartel. The last agreement between Russia's biggest diamond producer and the South Africans ran out a year ago and the negotiations to renew it ended in the autumn. Today's already twice- extended deadline for a new deal is almost certain to be breached.

Both sides claim to have been suffering from the ragged end to the old arrangements. De Beers has complained bitterly of the "leakage" of Russian rough diamonds, nominally intended for domestic use, on to international markets. The result has been to blow a hole in the CSO's dominance of the world diamond "market".

Not that it shows. Last year set another record for world-wide diamond sales, which rose 7 per cent to $4.83bn. Prices have also been rising, despite Russia. De Beers managed a 3 per cent rise on average in July.

Is the CSO a bad thing? The European Commission appears to be able to live with it, even if the Americans cannot. The truth is, however, that its partial breach seems to have done De Beers little harm. It might even persuade the company to step up its marketing efforts. Spurred by the cessation of hostilities in the Middle East, the company mounted its first advertising campaign in the Gulf earlier this year, while the Pacific Rim represents a vast and as yet under-exploited potential market. It may be that a dose of free market competition from the Russians would do everyone some good.

A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
Life and Style
A small bag of the drug Ecstasy
Life and Style
Floral-print swim shorts, £26, by Topman,; sunglasses, £215, by Paul Smith,
FashionBag yourself the perfect pair
ebookA unique anthology of reporting and analysis of a crucial period of history
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Financial Analyst - Forecasting - Yorkshire

£300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...

Business Architect - Bristol - £500 per day

£500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...

Regulatory Reporting-MI-Bank-Cardiff-£300/day

£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Day In a Page

Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

Hunters protect Russia's rare Amur tiger

In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
Transfers: How has your club fared in summer sales?

How has your club fared in summer sales?

Who have bagged the bargain buys and who have landed the giant turkeys
Warwick Davis: The British actor on Ricky Gervais, how the Harry Potter set became his office, and why he'd like to play a spy

'I'm a realist; I know how hard this business is'

Warwick Davis on Ricky Gervais, Harry Potter and his perfect role
The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

The best swim shorts for men

Bag yourself the perfect pair and make a splash this summer
Has Ukip’s Glastonbury branch really been possessed by the devil?

Has Ukip’s Glastonbury branch really been possessed by the devil?

Meet the couple blamed for bringing Lucifer into local politics
Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup