Archives for: March 2009
Spring Cleaning time for Businesses
There can be no doubt in anybody’s mind that the time has come to reform the way companies present their accounts. The current financial situation was caused by a combination of negligence from directors, auditors, the supervisory regime of the FSA, the government, the Bank of England and NED’s. But endlessly debating where the buck should stop isn’t going to solve the problem; there needs to be positive action.
Company accounts are supposed to focus on the financial state of a business and yet they appear to obscure the points that matter such as balance sheet strength, exposure to risk and financial performance and prospects. They have become cluttered with irrelevant facts and vague on the subjects that really matter, such as how a business is monitored and what should happen when issues arise
The Financial Reporting Council is currently reviewing the complexity and relevance of corporate reporting requirements (“the complexity project”). They aim to consult with different participants involved in regulating, communicating and using corporate information, and determine the causes of complexity. Develop and promote, both nationally and internationally, recommendations aimed at reducing complexity in order to make corporate reports more understandable.
The review comes at a very interesting time and hopefully will enforce the need to refocus on best practice. The quality and clarity of reporting is going to be critical for all businesses, regardless of their size, sector, business success and financial stability. This could also provide opportunities for highly skilled management consultants and other specialists to step in and provide advice on business practices.
At the inaugural ICSA Corporate Governance Conference on the 18th March, Sir Christopher Hogg, Chairman of the Financial Reporting Council, announced that they will also be reviewing the effectiveness of the Combined Code on Corporate Governance in the light of the financial crisis.
Professional services providers such as PwC have also been looking into the importance of ensuring that the corporate reporting model evolves to provide greater clarity and ties in directly to the company strategy and risk profile. We all have to move to a position where the AR&A clearly and simply explain and set out the important issues to shareholders and the wider investor community.
There is an urgent need for more company secretaries/corporate governance specialists who can cut through the ‘gloss’ of Annual Reports and identify the real risk factors. They need to be people who have experience in writing annual reports, and are of a seniority to both understand the underlying validity of the business and can take corporate responsibility for appropriately addressing the governance issues.
The Company Secretary is uniquely placed to deliver on this front; they have had direct access to board-level decision-making, viewing it from an ‘all-round’ perspective. They know where the commercial versus legislative boundaries have to be; and how the annual report and accounts should – but might not – properly reflect this. They are also, of course, an Officer of the company and therefore could be subject to criminal proceedings, if the company trades fraudulently, or if company funds are misappropriated.
At the other end of the spectrum– and in respect of the provision of investor information – asset managers have been hiring bright young graduates to review their potential client investment targets, reports & accounts. Whilst this might suit the company’s culture, these guys simply haven’t got the experience that a seasoned cosec has.
Lord Turner, the head of the Financial Services Authority (FSA), has been reviewing the way the financial sector is regulated and published his findings on 18 March. You can read the full review HERE.
The FSA chairman made a blunt assessment of the failings of the current regulatory system, which had allowed the collapse of Northern Rock, Bradford & Bingley, HBOS and Royal Bank of Scotland. The City regulator also suggested it might eventually oversee the pay practices of all the firms it currently regulates.
Its 10 principles on pay would require firms to "establish, implement and maintain remuneration policies, procedures and practices that are consistent with and promote effective risk management".
Turner said risk management policies had to be integrated into pay policies. "This has not been done before in the UK or elsewhere in the world, either by individual firms or by regulators. As a result some bankers have been encouraged by the promise of big bonuses to take excessive risks with other people's money."
And if we’re talking about reform and increasing corporate governance and regulations, isn’t it also time to rethink the process of board evaluation? Shouldn’t there be greater formal requirement for this important function be carried out by independent consultants rather than at the discretion of the company?
The ICSA has announced that it is going to contribute to the banking governance study. The Institute has confirmed that it intends to carry out an analysis of board values and behaviours to assist the HM Treasury review of governance in the banking sector, which is being carried out by Sir David Walker.
The analysis will distill the considerable body of knowledge, skills and experience of the company secretarial community to provide insight on the boardroom-behavioural aspects of governance. The ICSA believes that company secretaries are uniquely placed to comment on any changes needed to ensure that appropriate vales and behaviours are exhibited by directors when fulfilling their statutory duties and delivering the wider expectations implied by regulatory and governance frameworks.
At the end of the day the board is accountable to the shareholders and the shareholders deserve a better deal than they’ve been getting of late. Reforming the system from every angle is imperative to increasing shareholder value, which has to be good for everyone.
The task is not going to be an easy one. Sir Christopher Hogg commented that the financial crisis was the 'result of a massive failure of governance at every level involved, going way beyond, though not excusing, the failures of corporate governance in publicly-quoted UK banks.’
‘The failure of those governing to see the wood for the trees - or, if it was seen, to generate appropriate action – points to a need for reappraising governance at every level from first principles,’ he added. ‘It will require leadership, co-operation, imagination, patience and nerve to do this reappraisal job well enough to obtain some lasting benefit to offset the huge damage that has been done.’
So we now have a situation where several regulatory bodies will be contributing their suggestions on how to solve the financial sector’s problems. What will happen when differences of opinion occur, as they are bound to? Will all sides be listened to? Are you confident that enough is being done to prevent this crisis happening again?
The Results Are In!
You may remember that Michelle Lennie blogged last month about the Certificate in Recruitment Practice exam that we sat on Valentines Day.
Well the results are in, and the good news is that both of us passed!
So what does this mean for you? It means that we are now part of an elite group of Qualified Recruiters. It’s a qualification that demonstrates to both our candidates and our clients that we have the knowledge, ability and professionalism that you would expect from your recruiter.
This nationally recognized recruitment qualification, developed jointly by the REC and key employers, is a must-have for Recruitment Consultants and so we feel like it’s a great achievement.
Thank you to everybody that wished us luck & let’s all now wish good luck to our colleagues Graham and David who will be sitting the exam in the summer!
CSS at the House of Commons!
On the 17th March, Michelle and I attended our first ICSA Careers Evening. Initially somewhat surprised by the choice of venue, we were immediately swept away by its grandeur upon arrival and could see why the House of Commons had been chosen to host the evening. The building is magnificent and as we made our way through the Visitors section to the Terrace, where our reception was being held, we couldn’t help but be impressed by the beautiful surroundings and felt very privileged.
Stephen O’Brien MP and FCIS hosted the event and welcomed us all before we assembled for an informative talk on the ICSA’s professional qualification and the importance of the Company Secretary’s role.
The evening was well attended by qualified Chartered Secretaries, ICSA members, potential entrants into the profession, University Career Advisors and ICSA staff – so for us, it was a great opportunity to network. We hope that we were able to offer useful advice and help on recruitment and company secretarial jobs – we certainly learnt a great deal about the institution – and we look forward to hearing from many of those we met at the evening.
Feel free to write me (Nicola), or Michelle, or connect with us on the BLT & CSS Recruitment Network on LinkedIn!
For more information on the ICSA please visit their website - www.icsa.org.uk.
It could only happen in France, or could it?
Two French managers were held hostage by workers unhappy with their severance packages last week. The pair, HR manager Roland Bentz and Sony France boss Serge Foucher, were held for 18 hours over the weekend by workers at a Sony plant in South West France. It is due to close on April 17 with the loss of 311 jobs.
Union spokesman Patrick Hachaguer told Reuters that "we hope this time our voices will be heard. They told us we are all going to be sacked and offered us one month of salary for every year worked, but nothing for years worked after the age of 55."
After their release, Bentz and Foucher were to hold talks with state and union representatives.
Taking a boss hostage is becoming an increasingly common protest gesture in France. Last year, the English boss of a car-parts factory in eastern France was held for 48 hours in his office, sleeping on a massage table and being provided with blankets and sandwiches. He said he felt like "a prisoner in Alcatraz".
In another incident last year, police stormed an ice-cream factory in Saint-Dizier to free a manager who had been held hostage by workers angry over job cuts. At least 14 staff were injured trying to stop police releasing him.
The French are well known for their culture of walk-outs and street protests when things aren’t going their way, but surely taking people hostage is going a bit too far?
But these incidents in France reinforce the need for managers to sit down and consult with everybody concerned rather than dropping a redundancy bombshell on an unsuspecting workforce.
HR professionals are in a difficult position at the moment but if redundancies have to be made, a bit of forethought and careful planning can help soften the blow. We’d hate to see a situation where UK bosses are held hostage by the unions or disgruntled workers.
Have you had to deal with mass redundancies lately? How did you cope with the situation and do you think you could have done more to help the unfortunate casualties?
How deep can you cut?
An article in The Economist (“Swinging the axe” – 31st January 2009) about redundancies suggests that cutting out the bottom 10% performers in an organization should “remove fat without damaging muscle”. But more could be dangerous.
It quotes an example (from a Harvard Business School study) from the early years of this decade when, during the downturn of that time, many professional services firms let go too many of the lower ranks, and then found they were shorthanded when the economy bounced back. “Firms built on pyramid structures, in which senior managers mentored large numbers of employees below them, suddenly found that, in a growing economy, they lacked the mentors needed to manage the army of new recruits.”
Will the consultancies repeat this error? Signs suggest not – so far.
Focus & Smart Choices – Recruitment for Recruiters Workshop
Recognising it to be a particularly difficult employment market for in-house Recruiters at the moment, BLT HR have joined forces with employment law specialists Fox Williams LLP and Coaching Consultancy ThinkFeelKnow, to deliver a cleverly designed Workshop on “Recruitment for Recruiters” to help them gain further competitive advantage.
The Event is being held at BLT’s offices in Chancery Lane on Monday March 30th at 8.00am – 11.00am and is open to Senior level Recruiters who are seeking their next career move. If you are interested in attending this event then do please contact us at firstname.lastname@example.org. Places are limited and will be allocated on a first come first served basis.
We look forward to hearing from you.
Could you be the next Richard Branson?
Sir Richard Branson believes that the next generation of self-made billionaires will emerge from the corporate wreckage of this recession. In an exclusive interview with The Times, Sir Richard said: “There are a lot of Richard Bransons that will come out of the next three or four years.”
The Virgin boss believes that the recession has presented entrepreneurs with their greatest opportunity in generations. “Fortunes are made out of recessions. A lot of entrepreneurs get going in the economic depths because the barriers to entry are lower,” he said.
Richard Branson entered the business world during his teens. Since then he’s seen four recessions. His Virgin empire includes credit cards, trains, planes, mobile phones and music "mega stores". He’s continuously seeking new business opportunities and loves a good challenge, especially when he enters a market that is dominated by a few major players.
He is however concerned that the ambitions of the next generation of entrepreneurs could be scuppered by a lack of financing. As one of the PM’s business advisers, he is urging Gordon Brown to make the liquidity crisis the Government’s top priority.
Sir Richard also urged business leaders not to panic and cut jobs unnecessarily. He has instructed his managers to find alternatives to job cuts, such as job-sharing or shorter working hours, wherever possible.
He definitely has the power to infuse optimism but will his positive attitude have any impact on the way companies cope with the current economic crisis? And do you think his comments will encourage more people to become entrepreneurs over the next couple of years?
Online gambling on the increase
We’re cutting back on restaurant meals and opting for fish and chips and drinking beer instead of wine but we still carry on gambling!
Only the most hardened curmudgeon could find fault with last week’s numbers from Sportingbet. The online bookmaker reported a 35 per cent jump in second-quarter underlying operating profits to £10.1 million and it continues to regain the ground lost in September 2006 when the US internet gambling ban wiped out two thirds of its business. Its geographical diversification means it no longer relies too heavily on any single market and further expansion into South Africa and Romania underscores that strategy.
We reported last month on the success of other gambling companies such as Ladbrokes and Camelot. But is gambling a recession proof industry? It appears so; during the recession that hit us in the early 90s analysts claim that there wasn’t any material decline in the UK in the bookies and casino sector at all. And with the advent of online gambling, it’s become easier than ever to place a bet.
In September 2007, the Gambling Act 2005 came into force and changed the regulatory landscape of the industry. As well as making gambling debts legally enforceable in English law, overhauling years of common law tradition, it introduced TV and radio advertising for gambling companies. The act also saw the establishment of the Gambling Commission, which has the authority to award unlimited fines.
As a regulated industry there will always be a need for Company Secretaries to aid with compliance. Will the industry continue to boom despite the recession? Only time will tell, but so far it seems to be holding up well.
Are you one of the growing number of people who enjoy online gambling? Or are you a cosec working in the industry? Why do think companies like Sportingbet are doing so well?
BLT at the Top-Consultant.com Recruiter Awards 2009
In an earlier post, I wrote about how BLT swept the Top-Consultant.com Recruiter Awards held in Mayfair this year. Now you can watch how Don Leslie received his award for Best Individual Recruiter and how BLT came second in Candidate Reach and was also voted Best Recruitment Firm 2009.
To see how you can stand out of the crowd of candidates, watch our own Don Leslie, Matt Alder from Barkers and Giles Guest from Enhance Media talk about how recruiters can separate the great from the good and how you can stand out of the crowd.
To stay up to date on all our videos, subscribe to our BLTrecruitment channel on youtube!
We’re proud to be No. 1!
We are delighted to announce that BLT has regained their position as the number one Management Consultancy Recruiter in the latest Top-Consultant poll and that our very own Don Leslie has been voted the best individual recruiter of the year. In addition, despite our small size, we are a good second in terms of candidate reach, with close to twice the reach of the firm in third place.
The awards were announced during Top-Consultant's 8th Annual Recruiter Event in Mayfair this morning.
The survey used to be conducted solely from people registered in the Top-Consultant database. This year, for the first time, they also approached candidates with CVs on other job boards, on LinkedIn and polled recent hires from client companies such as Accenture and Deloitte. Candidates were asked to name the recruiters they would most recommend, and the ones they wouldn’t. The results therefore give a totally un-biased and detailed view of the recruitment market.
After the short awards ceremony, Don was invited to join the panel of recruitment experts from advertising agencies, recruitment firms and the online recruitment industry in the yearly question and answer session.
We are extremely happy to have climbed back up the rankings to the top spot this year. In the 8 years this survey has been conducted, BLT has taken the top spot 5 times now, with a 2nd and 3rd place completing our medal collection. Having been knocked off the podium for the first time last year, reclaiming the awards both for Best Management Consultancy Recruitment Firm and Best MC Recruiter reaffirms that the additional efforts we have put in over the last year have paid off.
We would like to thank all the consultants that voted for us and promise to continue to provide the best recruitment service in the UK!
Management Consultancy Graduates Top the Salary Charts
A recent press release from Tesco informed us that a 25 year old graduate could earn a total of £155,000 in the first four years if they chose to elect a career as a management consultant.
A newly qualified graduate entering the field of management consultancy can expect to be earning between £25,000 and £30,000 in their first year. By the time they’ve held the role for 4 years, their earnings potential has increased to around £50,000.
Management consultancy is all about change. You'll be working as part of a team that helps clients improve business performance. To be successful you need to have excellent analytical and communication skills and be resourceful and cool under pressure.
If you have those attributes then a lucrative career as a management consultant could be just the thing for you. Contact the MC team at BLT email@example.com
Should non-executive directors have more power?
Why did non-executive directors fail to prevent the banking mess? William Rees-Mogg gave us his slant on the problem in the Times on Monday.
His first role as a non-executive director began in 1982 when he joined the board at GEC. As he explains in his article, Arnold Weinstock, the MD, encouraged his non-executive directors to make their own contribution to the business of the company.
‘The only training I was ever given as a non-executive was his invitation to attend his formidable budget meetings, in which he cross-examined executives about their budget plans and their outcomes. His door was always open to directors, whatever the issue under discussion, and non-executives were as welcome as executives. As a result non-executives learnt the business and joined in the major decisions. We saw ourselves as part of the company, not as regulatory policemen. If we were not convinced by GEC policies, we could always put our case.’
But just how easy is it these days for NEDs to impose their will on the chief executive? The banking system has undergone huge technological and psychological changes over recent years. Mr. Rees-Mogg believes that the experience of the non-executive directors became outdated and although they would have given warnings to the board, they lacked the technical expertise to show there was a real risk.
Non-executive directors are hired based on their prior experience. But as with any job, without ongoing training on new technology and methods, that experience can quickly become outdated.
The lack of up to date experience may well be one reason why the banking system got into such a mess but it doesn’t let the non-execs off the hook when it comes to the subject of salaries and bonus payments.
Lessons have to be learnt to stop this happening again. Looking forward, are we going to see a change in the role of non-executive directors? Should they be given more power? And if they are, will they be listened to?
Privately Held Businesses are confident despite the recession
Over two thirds (68%) of privately held businesses in the UK are confident that staff levels will stay the same or increase in 2009. This is according to new research published by financial advisory firm Grant Thornton, which incorporates the opinions of 7,200 businesses across 36 countries.
Just under half (49%) of those surveyed expect their staffing levels to remain the same, whilst 19% expect to see an increase in staff numbers. The survey also found that 88% of UK PHBs expected to increase salaries in line with inflation in the coming year or keep pay at the same level as last year.
Privately held businesses recognise the need to retain their talent and because they are more adaptable than their corporate counterparts they can easily implement creative working methods such as redeployment, flexible working and the granting of sabbaticals. These non-financial incentives also help with motivation, especially if an employer can’t afford to implement a salary increase this year. By adopting such methods and reducing the risk of redundancies PHB’s will be in good shape to take advantage of new opportunities when the economy turns.
Do you work for a privately held business? Are you expecting to receive an annual pay increase or are you happy to forego this in order to retain your job? And has your employer introduced any non-financial rewards to boost employee motivation?
Get ready to celebrate International Women’s Day!
March 8th is International Women’s Day! IWD is a major day of global celebration for the economic, political and social achievements of women past, present and future. There will be around 200 events taking place in the UK over the coming week including concerts, exhibitions, talks and walks.
Some years have seen global IWD themes honoured around the world, while in other years groups have preferred to 'localise' their own themes to make them more specific and relevant. This year’s global theme is ‘Women and men united to end violence against women and girls’. Here in the UK, the Welsh Assembly has chosen the theme ‘Bridging the Generational Gap’ and Doncaster Council has selected ‘Women's Voices and Influence’.
International Women's Day was honoured the first time in Austria, Denmark, Germany and Switzerland on 19 March, 1911. More than one million women and men attended IWD rallies campaigning for women's rights to work, vote, be trained, to hold public office and end discrimination. However less than a week later on 25 March, the tragic 'Triangle Fire' in New York City took the lives of more than 140 working women, most of them Italian and Jewish immigrants. This disastrous event drew significant attention to working conditions and labour legislation in the United States that became a focus of subsequent International Women's Day events.
IWD is now an official holiday in China, Armenia, Russia, Azerbaijan, Belarus, Bulgaria, Kazakhstan, Kyrgyzstan, Macedonia, Moldova, Mongolia, Tajikistan, Ukraine, Uzbekistan and Vietnam. The tradition sees men honouring their mothers, wives, girlfriends, colleagues, etc with flowers and small gifts. In some countries IWD has the equivalent status of Mother's Day where children give small presents to their mothers and grandmothers.
There’s no doubt that the role of women in society has changed greatly since the first IWD. We now have more women in the boardroom and greater equality in legislative rights. We’ve seen women astronauts and prime ministers but they are still not present in equal numbers in business or politics. And the gender pay gap still stands at 21%. Hopefully the government’s new equalities bill will go some way towards closing that gap and increase the representation of women in parliament and elected bodies.
We’d like to hear your views on the changing role of women in society. Have you been inspired by anyone in particular? And who do you think has made the biggest contribution towards the advancement of women’s rights?
What affect will the new FSA code of practice have on bankers’ bonuses?
Bonus payouts should be principally based on profit, not revenues or turnover, according to the City regulator. The aim of the code is to ensure that firms have remuneration policies which are consistent with sound risk management, and which do not expose them to excessive risk.
The Financial Services Authority (FSA) is arguing, in its new Code of Practice on Remuneration Policies, that measuring performance based wholly or mainly on revenues or turnover can provide an incentive for employees to pay insufficient regard to the quality of the business, or its suitability for the client. Therefore, it says, profits should be the preferred measure – however, they should be adjusted for risk, including future risks not adequately captured by accounting profits.
It also stresses that firms should not assess performance solely on the results of the current financial year. As the FSA points out ‘profits from banking activities are volatile and subject to cycles. ‘The financial performance of firms and individual employees can be exaggerated as a result. The assessment process should include measures to ensure that employees are assessed on their longer term performance.’
Boards and relevant remuneration committees should exercise independent judgement and demonstrate that their decisions are consistent with the firm's financial situation and future prospects. Their members should have the skills and experience to reach an independent judgement on the suitability of the remuneration policies, including the implications for risk and risk management. Whilst the FSA recognizes the need to offer competitive remuneration packages, industry comparators should be a secondary rather than a primary factor when it comes to the decision making.
The new code also states that ‘The major part of any bonus which is a significant proportion of the fixed component (salary) should be deferred, with a minimum vesting period.’
This principle is designed to ensure that the interests of those receiving significant amounts of bonus are aligned with the longer term interests of the firms, whilst still providing flexibility for firms to devise attractive remuneration structures measured against practices across the corporate sector.
In the FSA's view an example of good practice would be that where a bonus is a significant proportion of the fixed component, the proportion to be deferred should be not less than two-thirds. The vesting period of the deferred element should be appropriate to the nature of the business and its risks.
This sounds not dissimilar to the new bonus structure announced by the troubled Swiss bank UBS towards the end of 2008. They announced a policy to link pay to long-term profit using measures that take into account the amount of risk taken in earning the income. Under its model, UBS executives will be paid only one-third of their cash bonuses in the year they are earned. The other two-thirds of the money will go into an escrow account and paid out over the subsequent two years.
Do you think the new code of practice goes far enough to curb the huge bonus payments that we have been seeing over the last few years? And how will the bankers react to the idea of two-thirds of their bonus being deferred?