Is “The Right Thing To Do?” the right thing to do?

Posted on December 12, 2012 by David Tebbutt

Last December we embarked on this blog with little idea where the journey would take us. We just felt that a lot of people of good will were out there with good ideas about how to make our world better. All we had to do was find them. Or, better yet, for them to find us.

And, through a mix of word of mouth and downright cajoling, they delivered their thoughts, based on their life experiences, for us to share with a wider audience. And, for that, we are truly grateful to every one of them. Here they are:

As you probably know, this site is non-commercial. Everything is voluntary and the most anyone gets is the opportunity to see their words published and to give themselves a slight exposure to a wider audience. Some benefit from this more than others. No names, no pack drill.

I’d just like to say “Thank you” to every contributor and reader and wish you all seasonal greetings and a happy new year. We’re going to take a bit of a break now. I’ll leave you with a list of the contributions and perhaps you’ll enjoy reading some of those you missed.

Why things will get better - from a Matt Ridley TED talk
Entrepreneur Extraordinaire, Felix Dennis, on Good Fortune
Never mind GDP, what about Gross National Happiness? - from a Chip Conley TED talk
Reconnecting kids with the school curriculum - Ray Maguire
Has the Khan Academy found the right way to educate? - from a Salman Khan TED talk
Why green makes business sense - Ben Goldsmith
Is sustainable growth a myth? - Clive Longbottom
Rag and bone men of the information world - Euan Semple
The power of community Mark Chillingworth
Where’s the ‘social’ in ‘accountancy’? - Martin Banks
Mind the gap - Hussein Dickie
Inhumane HR behaviour - Tracey Poulton
Listen! (To the right people) - David Tebbutt on Cognitive Edge work
Get on the trust trajectory - Rob Wirszycz
Baby, bathwater, beware … - Anne Marie McEwan
Is green the new gold? - Tarquin Henderson
Hunters got us into this mess – will farmers get us out? - Dr. Bill Nichols
Fairtrade, Organic or Me-Me? - Andy Redfern
How sticky are your labels? - David Tebbutt
Reputation is deeds, not words - Tari Lang
Passion + talent = magic - From Sir Ken Robinson’s work
Authenticity vs perception - Dr. Bill Nichols
Could the fly save humanity? - Jason J. Drew
Ignorance and prejudice - Ibukun Adebayo
Superstorm Sandy: what would you have done? - David Tebbutt
Doing the right thing – even when no one is watching - Neil Crofts
Stubbornness – The Nailhouse Principle - Drew Buddie

So, what do you reckon? Is “The Right Thing To Do?” the right thing to do? Do you know anyone who would like to share their learnings from real life for the greater good?

Please point them at me trttd@tebbo.com. Thank you. (PS It could be you too!)

Is green the new gold?

Posted on June 27, 2012 by Tarquin Henderson

Sadly the Environment seems to be increasingly one of Westminster’s favoured battlegrounds. A place where the Treasury can show who really is boss while the Department for Energy and Climate Change (led by a Lib-Dem) attempts to grapple with some of the most challenging issues facing our country today.

I say grapple but I could also (again sadly) say fumble or stumble as there has been an alarming amount of dilly dallying at times on the timing and structure of key environmental policies – but that’s the theme for another post. The key point here is that despite all of this political posturing, the green agenda is not going away and nor can it.

We’ve all heard the view that now we are going through the economic wringer, any thoughts of doing something good for the planet have to take a back seat. That is a view fostered in the main by never-knowingly-under-lunched City types who much prefer to assess business on the levers they best understand and to avoid harder to assess, in number terms, contributory factors like social and environmental responsibility. I think they are missing the point and not just because we all need to ‘save the planet’. (A euphemism for ‘save ourselves’, by the way.)

Environmental issues need to be put into a stronger business context because they are just as relevant to many businesses’ balance sheets as the cost of raw materials, payroll or competitive pricing. That might seem a bit of a stretch but this is really not the warped view of the strident environmentalist lobby. Managing energy use in business today is about making your business more competitive.

A number of factors are at work. Here are three of them:

Firstly, the simple cost of energy. Despite some recent decreases, the general trend is for a steady and inextricable increase in energy costs – to heat the factory, power the machine tools, light the call centre, turn the turbine.
Then there is an increasing trend towards supply-chain compliance. If you make sandwiches (or trucks for that matter) for a supermarket, the chances are that they will be placing increasingly punitive penalties in place if you don’t cut their environmental mustard. Or they may just choose to work with someone else. While that is a factor already with some clear precedents in the Food & Drink sector, we are seeing signs of other markets adopting this strategy – manufacturing, aviation, entertainment and leisure.
Also, while there is a lot of carrot in the Government’s approach to encouraging consumers to be more efficient in their energy use, it’s the big stick that is being used increasingly with businesses. The Carbon Reduction Commitment (CRC) is already causing disquiet among the UK’s largest businesses – it’s effectively designed to place an energy tax on the country’s biggest energy users. My colleagues and I believe that this approach will begin to filter down towards SMEs before too long. The basic message being, “if you haven’t got your energy act together then the Government are going to strongly ‘encourage’ you to do so …”

What many businesses are missing is the will to do something about all this. To date, unless you are a power user of energy there has been little compulsion to do anything. It’s simply not been that important. My view is that those businesses, no matter how small, who grasp the concept that good energy management can be good for business, will improve their competiveness and their bottom lines. So green can be made into gold.

Mind the gap

Posted on April 18, 2012 by Hussein Dickie

Large income disparities are very destabilising for any economy. In the UK this is a very real problem. This graph shows the Gini Index for the UK to 2009. (With kind permission of the Institute of Fiscal Studies which owns the copyright.)

A coefficient of 1 would mean one person receives all income, while 0 gives everyone an equal share. Among all developed countries the UK has the largest growth in income inequality. By contrast, Scandinavian countries, France and Germany have actually managed narrow ‘the gap’.

Most people were appalled by the excessive salaries and bonuses that bankers paid to themselves and found the practice immoral and bad business ethics. The government told us that it only concerned a few bankers and we should accept this to stay competitive in the global market.

Monetary Financial Institutions are of concern because they should fulfil key socio-economic functions, i.e. providing liquidity to consumers and small businesses. However they have become a self-serving industry more occupied with gambling and speculation for their own profit interests and quite disconnected from the needs of the rest of us.

But, let’s face it, if you could create money from nothing and 65% of your income came from interest, wouldn’t you want to create and lend as much as possible? This, combined with a compensation policy that encourages this behavior, is one of the major drivers for the widening of ‘the gap’.

In the five years 2004 to 2008 the money supply (M4) in the UK almost doubled in five years. £1.3 trillion was created by our MFI’s and lent, with interest, to consumers, businesses and the Government. The relevant part of the Gini index – below – shows that wealth at this time accumulated increasingly to the rich. ‘The gap’ widened.

The chart below divides the taxpaying population into 10 deciles, each containing roughly 3 million people; the poorest to the left and the richest to the right. As you can see, the richest ten percent got 37 percent of total compensation while the poorest ten percent actually lost 1.3 percent of theirs.

About 1.3 million people work in the banking industry (4.2 percent of total employees in the economy). Of them, 702,000 are represented in the top decile. In other words, 23 percent of the richest 10 percent are bankers.

The next chart compares the growth in banking compensation with the rest of the economy. Up to 2008, banks ran at 11 percent compared with 4.3 percent for the rest of the economy. After that the banks booked £30 billion in losses and remuneration dropped by 8%. But, as you can see (green line), it was only a short interlude, then remuneration continued at the rate they had become accustomed to.

Part of the banks’ 11 percent growth rate could be explained by the increasing number of employees but this would only explain about 2-2.5 percent. And it doesn’t explain why compensation grew again after 2009 when employment actually declined sharply and has still not reached the level of 2008.

The red caps in the next chart show the amount bankers received over and above the ‘rest of the economy’ growth rate of 4.3%. This amounts to an average £6.4 billion per year.

To set this into perspective; The poorest 3 million in this country receive only about £10 billion out of the total compensation pot, those little red caps would make a huge difference to their standard of living. Or, if the government received this extra cash, it could reduce the deficit by a massive four to five percent per year.

Yes, fiscal measures can help distribute wealth more fairly but, really, we need to redesign our banking system; one that stops private banks creating money from nothing, stops them taking risks on the back of taxpayers and compensates employees for the right reasons. Such systemic changes will stabilise our economy, end those boom and bust cycles that victimise mainly the poor, and liquidity will start flowing to where it actually produces something real.

Many lessons in history teach us that the path we are on at the moment will lead to revolt and socio-economic instability and, eventually, the collapse of society and depression. Could the recent riots be a portent?

Where’s the ‘social’ in ‘accountancy’?

Posted on April 4, 2012 by Martin Banks

At the root of what I would call ‘social accountancy’ is how money has become divorced from its reason for existence. It is now a ‘thing’ in its own right, seeming to be building a life of its own.

One reason for this is the way it is accounted for, particularly in terms of the short-term, bean-counting model currently called accountancy. A change in that model to one that included and accommodated what money achieved when being used, might be more beneficial.

This idea started years ago when people used to call Concorde a ‘White Elephant’. Yet I would argue it cost hardly anything because building it, then using it, kept thousands employed directly, who all paid tax, and then many others employed indirectly, who also paid tax. The money kept moving, and hundreds of thousands, if not millions, enjoyed a reasonable life… arguably not bad for a White Elephant.

And lessons were learned – not least being the huge technological spin-offs that have led to other businesses growing, where people are employed and….pay tax. An obvious example here is DARPA, the US Government’s Defense Advanced Research Projects Agency whose work led directly to the development of the internet. And look how many new businesses have sprung from that.

A more topical example is the planned Government investment of £9.8m in Nissan’s much lauded new car venture, which is expected to yield ’2,000 new jobs’. If we were to assume a collective average wage of £26,000 and a 20% income tax take, that equals £10,400,000 a year in income tax: a complete Return on Investment in less than one year. Many businesses would kill for that.

Going back to Concorde: From the signing of the contract the two governments invested heavily as staff were employed and contractors signed up. The staff were paid, and in those days income tax rates were higher than today. So let’s say some 30% (on average) of that salary bill came straight back to the Government in income tax. In practice it was probably more.

But now extend the idea. One example: any education the new staff needed required not just trainers but an organisation to support them. The trainers, the support staff and even the builders paid income tax. Add the shopkeepers, energy suppliers, transport providers (even if that is just shoe leather), farmers and food processors, and a panoply of others – all making a living, all paying income tax.

One person’s disposable income became the next person’s salary and a source of income tax.

Yet modern accountancy models oblige businesses to, for example, close down here and move off-shore because the manufacturing costs – to just that business – are lower. In fact the money system (such as the stock market) even ‘praises’ them for doing so.

But neither the company nor the stock market has to account for the people put out of work – no longer paying tax, and requiring support from the benefits system. That is a model where money wins for its own sake – not for the sake of the people whom it once served.

And such actions also give other countries an income tax bonanza which maybe the UK should be getting.

The by-products in terms of wider economic growth, more contented and fulfilled people and intangibles such as reduced load on law and order services, the health service and a wide range of other services cannot be fathomed because we have no process that can account for them as part of the ‘whole’.

Is our present trajectory completely mad? What do you think?

The Right Thing To Do

Business leaders and thinkers share their knowledge

Category Archives: Finance

Is “The Right Thing To Do?” the right thing to do?

Is green the new gold?

Mind the gap

Where’s the ‘social’ in ‘accountancy’?