This article is taken from the July 2022 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.
I have been a director of trading companies for over 25 years and not always ones I own. It is only recently that I have felt experienced enough, though in younger days I probably erroneously believed I was. For all that time I have been a solicitor, but in truth I have never been a particularly skilled lawyer.
When employed with law firms, I was always better at enticing new clients than doing the work. Fortunately, the last two firms I was with allowed me to front the work others did. Americans call this a rainmaking role. Sometimes it did not rain in the desert and I had to do some legal work, which was unfortunate for all.
All this seemed a little unfair
Usually, I was better at telling clients what to do than actually implementing matters for them. This, I think, makes me a better board member, seeing a wider picture. Whilst accountants most commonly make the transition into management — all business being about the numbers ultimately — other professions can be useful to have around the table. At least I have a nose for lawyerly fee-ramping and the unnatural stretching of transactions.
my father made it clear he would not employ me unless I was professionally qualified in some way and had spent time losing other peoples’ money, as he put it, before being allowed to touch our own.
After being thrown out of Sandhurst for being utterly useless (I failed map-reading thrice, which I was loudly informed was a unique under-achievement), it was arranged for me to endure an intensive round of internships: accountants, solicitors, surveyors, stockbrokers and at what we used to call a merchant bank.
Standing in front of his study desk I was obliged to choose. None seemed enticing but all were better than mucking out pigsties on the estate farm, which is what I was then doing. “Why the law?” asked Dad. “Because all the others seem a bit thick,” I replied.
All this seemed a little unfair since he did not have a qualification to his name. He had left school at 15, worked at the garage and raced rally cars when he was not trading them. He graduated to larger parcels of vehicles and equipment, then companies.
It took me a while to realise he was uninterested in administrating these businesses. He just liked trading them and searching for juicy undervalued morsels. By the end of his working life, he had assembled a “bag o’ nails” — a disparate group of assets and trading businesses, some of which were even profitable despite his lack of management interest. It has taken a few years to slim down and establish controls. He lost less than he made and had an exhilarating ride.
i had some family apprenticeship. During holidays I was obliged to labour either amongst the pigs or change tyres for the mechanics. Before I was a teenager I was told to wash, wear a tie, sit silently on a wall chair at Board meetings and make notes to ask questions after.
It was only after I qualified as a solicitor that I realised my father had only ever spoken to me on three topics; business, my future and killing animals for sport, which fortunately happened to be three of my four favourites.
Good governance is about identifying and limiting commercial risk
My cousin became a non-executive director of a main market public company and vice-chairman of an AIM company. Not having any qualification, he put himself on one of those courses that instruct you how to be a NED and found it useful, albeit suffused with a degree of corporate bullshit. Being a successful farmer, he was a sound businessman — farming is a volatile industry with high costs and unpredictable margins. To survive, farmers need daily practical entrepreneurialism, good cashflow management (and sometimes luck).
By the time his decade as a PLC NED was over, there was board emphasis on social responsibility and a new Chairman began to call itself a “Chair”.
It used to be a truism that when senior management got Rolls Royces and commissioned portraits for the boardroom it was time to sell the shares. The modern alarm signal is when the non-execs include public sector monkeys, usually from local government or the NHS, and usually blinkered to the limits of process. Also, when one of the board executives is also the Diversity Officer you know misguided priorities have led the corporate leadership to be swayed by fashion and not intellect.
Board meetings can be used to manage the business, but if they are of any size then they are usually for its governance, not management. Good governance is about identifying and limiting commercial risk, not virtue signalling.
The best contribution any company can make to society is not to fret about progressive language, bleat a groupthink diversity agenda or espouse caring environmental platitudes, but to make growing profits. Corporation Tax is a hefty 25 per cent and can’t be raised much further without being counterproductive in the long term. Ultimately the only way to afford all government spending, current and future, is to have an expanding economy. You do that through capitalism — and boards, private and public, should always regard profit as their primary social responsibility.
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