Carillion: just an isolated symptom or the first case of corporate Ebola?

We need to remind our firms’ leaders and managers that their principal accountability is to create and sustain a values-driven, high-performance work climate.

Carillion – the politicians’ view

“Carillion had a ‘rotten corporate culture’” screamed the headline above the article in the business section of BBC’s news website on Wednesday, May 16th, see

The article remarks, “In a damning 100-page report, the Work and Pensions and the Business, Energy and Industrial Strategy committees said:

The Big Four accountancy firms were a “cosy club incapable of providing the degree of independent challenge needed”

Carillion’s collapse had exposed “systemic flaws” in corporate Britain and showed regulators were “toothless”

And warned “Carillion could happen again, and soon”

Furthermore, the two committees called Carillion’s rise and fall “a story of recklessness, hubris and greed“.

Undoubtedly, these are strong words.  Despite emanating from two bodies representing a larger group of people, MPs, in whom the public have lost trust and respect, they should not be disregarded as an example of the pot calling the kettle black, of people throwing stones in glass houses.  They beg a broader question being posed.

A bigger question

Is “culture” in British business infected by a virus?  Is there an “elite” making good by riding on the shoulders of the giants who are their employees, suppliers and customers or clients?

Other reports highlight poor productivity (see, low engagement (see, weak innovation (see although, pleasingly, the UK “creative” industries continue to flourish, and growing concern about work-based mental health issues (see

In the week of the announcement of the death of the brilliant author, Tom Wolfe, is British business still consumed by a Bonfire of the Vanities?  Have we lost sight of some fundamental principles of leadership and management?

Greed is good: was that all Gekko said?

In the movie, Wall Street, Gordon Gekko, gave his famous “greed is good” speech.  It is worth reading the fuller narrative of the character’s soliloquy, see

The distinction Gekko makes between ownership and management is important; it is relevant to the issue of culture.  We forget too easily that a great many people are owners, admittedly not directly but indirectly through their investments and, most likely, their pension funds.  We are at liberty to lobby the fund managers to work harder for us to drive the wealth creation so that there is not just a trickle down of wealth but a more substantial stream.

J.K. Galbraith’s famous remark continues to ring true, “If you feed the horse enough oats, some will pass through to the road for the sparrows.”  Like Gekko’s 30 plus VPs, Carillion’s directors were being fed outrageous amounts of oats, yet the sparrows are now going hungry.  The impact to our wider society is considerable with three new hospital construction sites mothballed.

Read some of Mark Goyder’s excellent work about stewardship at

Greed is capitalist… or is it?

Should the pendulum be allowed to swing back to pre-Friedman free-market economics days and restore public ownership?  For instance consider the UK Government’s announcement to revoke the east coast rail franchise, see  Neither the UK’s public sector or socialist and communist economies across the globe are immune from greed with numerous examples of leaders feathering their own nests, e.g. consider the furore about “fat cat” pay in the UK’s health, university, school academy and local authority sectors.

In the latest edition of his programme “Last Week Tonight”, John Oliver savagely criticised the Venezuelan crisis (see, which is worth its 20 minutes watching time).  In this country with the largest oil reserves in the world, severe shortages of food and other basic commodities proliferate.  Yet in a clip of a TV broadcast shown during Oliver’s monologue, the country’s president believing he was off-camera was filmed stuffing his mouth with food; unlike many of his population his girth is still considerable because his food shelves are not bereft of stock.

If both the capitalist and socialist political systemic creeds exhibit dreadful examples of greed what can be done?   In China, President Xi is targeting practitioners of “graft” by arrest and imprisonment without trial.  Domestically and less severely, should our Boards comprise not just the normal cadre of executive and non-executive directors but also people representing the broader stakeholder community?  Theresa May proposed as much upon her assuming role of UK PM?

If the Carillion board had some seats occupied by their staff and representatives of contractors, “subbies” and suppliers, would the firm’s collapse have been avoided?  May’s proposal has quietly been brushed under the carpet, perhaps impelled by the fact it doesn’t seem to have worked favourably at VW.  Two seats on the Board occupied by “shop floor representatives” didn’t prevent the emissions scandal.

Corporate governance, culture and climate

Perhaps in the recruitment of NEDs, an exercise should be conducted to see if applicants can pass what I call the “Paxman-Howard test”, see  (Ritz-Carlton Hotel’s approach to root cause analysis was described as, “Ask why five times”, so shorter interlocution but the principle holds.)  Furthermore, should pluralism be outlawed so individuals cannot sit on multiple boards doing each other “favours” as the left-wing press alleges?  Perhaps two roles max?

Greed may be reined in if bonus schemes reflected Elliott Jaques’s view that managerial level is set by the time it takes for decisions to run their course.  Thus, for a CEO of a firm like Carillion, their reward for success could only be judged after three to five years, e.g. upon completion of a major hospital build and run-off of the warranty period without claim.  And, when strategy is realised through the successful delivery of associated tactics and allied operations, should it only be the C-suite that gets a whopping bonus; shouldn’t that success be equally celebrated by all receiving a common percentage share of the “pot”?

What values and motives are held by these senior leaders who gild their own lily and appear to have no sense of guilt when the collateral damage caused by their decisions is so significant.  Joseph Stiglitz, the economist, in his book, “The Price of Inequality”, highlights this emotional redundancy.  Of course, Stiglitz was a flag-waver for Venezuela’s previous president, the socialist Hugo Chavez, so perhaps his opinions carry less weight than the country’s current president’s waistline.

Peter Drucker, the godfather of management gurus, remarked the purpose of business was to create a customer, not profit.  Profit is the reward for creating and sustaining that customer by giving them first what they need and what they want.  In this sense, the customer is an end more so than a means.  This was the wider, philosophical view of Immanuel Kant, i.e. being a human is value of itself.  Does that attitude need to be more strongly held by leaders and have them change the exploitative tenor of the phrase, “Our employees are our most important asset”?

Corporate culture was originally defined as “How we do things around here”, which activity should be governed by a strong set of corporate values; Drucker also said, “Management is doing things right; leadership is doing the right things”.  Where those values are no more than dog-eared posters on the walls of offices and building-site cabins, they are not contributing much to informing how work is undertaken.  The kicker in this is that affects corporate climate, which concerns “how people feel about working there”, i.e. disengaged and under-valued – the proverbial mushroom in the dark being fed sh*t.

Climate can be considered to reflect how employee’s needs are met.  Check out Shay McConnon’s An Even Better Place to Work ( Glowinkowski International’s six dimensions of climate (, i.e. clarity, challenge, change, autonomy, recognition, and involvement.

The mushrooms of the previous paragraph tend not to be involved in the development of their work environment, being in the dark they have no clarity about the business’ purpose or direction.  Alongside them on the “breakfast plate of the work-place” lie the eggs (the chicken was involved) and bacon and/or sausage (the pig was committed).  I’m not advocating a Japanese karoshi-style commitment to work, which “first in, last out” FILO approach is the cause of much work-place stress, but one in which some freedom (autonomy) is actively encouraged.  Out of this can arise challenge and change and a genuine meritocracy (recognition).

If the fears of the politicians who wrote the report about Carillion are to be reduced, if not removed entirely, we need to remind our firms’ leaders and managers, which includes the expensive phalanx of professional services advisors, that their principal accountability is to create and sustain a values-driven, high-performance work climate, which is not the “country club” manner suggested by Blake and Mouton’s managerial grid, see

By so doing bottom line performance can be optimised (a fairer aim than maximised?) without the need for intricate financial engineering which, with my 1970’s bank training hat on, has seen “gearing multiples” explode to astronomical levels.  The associated interest outlay results in reduced dividend cover and depleted pension fund contributions.  At which point, management becomes an exercise in flogging a dead horse; and such a beast cannot pass on any oats to the sparrows.



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