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Time to trust the workers

Roger Trapp says companies are wasting the potential of their `greatest asset'
On the face of it, the problems at Marks & Spencer and the Rover car company have nothing at all in common. Until the end of last year, the retailer was reckoned to be Britain's most admired company, picking up management awards while enjoying a seemingly impregnable position in the high street. Rover, by contrast, had in its various manifestations been struggling for years.

But the sharp fall in profits and the boardroom row leading up to the appointment of Peter Salsbury to succeed Sir Richard Greenbury as chief executive is similar to the just-lifted threat to Rover's Longbridge plant in that it calls into question this nation's ability to compete on what is increasingly a world stage.

After all, different as they are, these are not isolated instances. Industries that we are supposed to be good at, such as banking and music, are now largely in overseas hands, while in hardcore sectors, such as engineering and car-making, the picture is even bleaker.

Barclays pulled out of investment banking and, casting about for other ways to keep the shareholders happy, lost its thrusting chief executive. EMI, shorn of the Thorn part in a demerger designed to "enhance value", has become a subject of constant takeover speculation.

Add this to last year's report from McKinsey, the management consultancy, that showed Britain languishing some way behind its supposed competitors in terms of productivity and the continuing dismal figures for investment in research and development, and the story gets even sorrier.

British business seems content to bumble along. Retailers complain about sluggish sales but seem unconcerned about their inability to supply what people want; exporters claim that they have brilliant products but cannot attract buyers because the strong pound makes them unattractive; manufacturers seem intent on making what they want rather than what the market demands.

Beneath the surface, it is clear that there is widespread dissatisfaction with how business operates. Nor is this just a view held by trade unionists and other traditional business-bashers.

In fact it is more likely to be voiced by the legions of people, often long-serving middle managers, "let go" in the early years of this decade as large companies used the recession as a smokescreen for starting the large-scale restructurings, consolidations and downsizings that, whatever the rhetoric, are still going on today.

Words such as "trust", "loyalty" and "commitment" pepper the management consultants' lexicons. But it is the perceived lack of such qualities among the highly-paid captains of industry that is causing such a groundswell of ill-feeling.

Though such people are supposedly so well remunerated largely because of their intelligence, vision, insight and the rest, they seem to struggle with the notion that living under an almost constant shadow of redundancy does not exactly create a feeling of well-being, let alone encourage the risk-taking upon which growth and innovation, the latest buzz words, depend.

And for all the positive messages put out by gurus and consultants - who are often already living the free-agent life - many do not find the prospect of being knowledge workers for hire to the highest bidders more alluring than working through the ranks with one employer.

There are, of course, exceptions. Sir Stuart Hampson, chairman of John Lewis, has spoken out in defence of being an employee, and not just for sentimental reasons.

"The threat of unemployment is inimical to flexibility: people hold on to what they are doing, instead of moving to what they could do best, what they enjoy most, what would contribute most to the success of the company," he says.

More and more consultants and executives are starting to move in this direction by talking about the keys to success being based around such "soft" issues as passion, trust, purpose, values and integrity. All of these are fine words that can genuinely inspire if the rhetoric accords with the experiences of employees, customers and other members of the stakeholder society.

Accordingly, increasing numbers of companies around the world are realising that survival in the 21st century is going to require adherence to a new set of principles, or rules of engagement. Without being too prescriptive about what these principles or rules are, it seems that they should centre on such issues as passion, commitment, sense of purpose, values, integrity and respect.

But this is not to say that rigidly following a single approach will do the trick; the strength of the principles behind the computer and electronics company Hewlett-Packard or 3M - the diversified industrial company most famous for Scotch tape and Post-it notes - is that they provide guidance rather than answers and so enable whoever is leading the company at a given time to make shifts into new markets or in management style confident in the knowledge that such moves are not leading in inappropriate directions.

Obviously, it is up to the most senior executives to make employees, customers and suppliers feel good about the organisation by making the right sorts of products, selling them in the right sort of way and generally setting the tone.

But the sort of thing that really fires up employees is what happens at the coalface. In organisations that understand the rules of engagement, middle managers are not hapless overheads despised in equal measure by cost-cutting chief executives and long-suffering employees. They make a difference.

Moreover, if it is increasingly true that marketing is now too important to be left to the marketing department and that human resources strategy cannot be consigned to the human resources department, it is certainly the case that leadership has outgrown the traditional leadership cadre.

There is a need for British companies to adopt some of the thinking of their continental European counterparts and challenge the US notion of the chief executive as demi-god. The advent of empowerment and flatter structures means that, in effect, we are all leaders now.

To see this in action, one only has to look at a company such as AES, a Virginia-based power-generating company that has attracted a lot of attention because of the way it has devolved power and decision-making to employees.

A Wall Street Journal article of July 1995, referred to in John Case's book The Open-Book Management Experience, described how a "cash-investments task force" comprising plant technicians was put in charge of investing the money in the company's Connecticut plant's reserve fund. Charged with putting the money in various forms of debt instruments, the employees were given a basic course in finance and left to get on with the job. As Case writes: "They investigated interest rates. They placed the buy- and-sell calls to brokers each week. They made the decisions."

It is all part of a business philosophy that was developed by Dennis Bakke and Roger Sant, the company's founders, which says: "We all want to be part of a community and to use our skills to make a difference in the world."

Sant's view is that taking this kind of approach had enabled the company to grow from fewer than 600 people in 1993 to nearly 10 times as many five years later.

Though many might feel that Virgin is all Richard Branson, the famously nonconformist business leader seems to have moved some way from the idea of the all-knowing chief executive by promoting the efforts of various lieutenants who are given great responsibility for various parts of the business.

The problem for British industry as a whole, though, is that few organisations have yet grasped the reality of workplace democracy in its truest sense so that they can devolve the running of their operations to teams.

Most companies are alienating their workforces - those people they insist are their greatest asset - and thus landing themselves with demotivated overheads rather than enthused partners.

As a result, they are putting themselves at a huge disadvantage when it comes to coping with the threats and opportunities posed by the development of the single European currency, the growth of the internet and rampant globalisation.

n Adapted from Roger Trapp's book, `Blunderboss', published this month by Capstone at pounds 12.99. To order call 01865 798623.