Directors of companies in financial difficulties should be aware of their pay and perks!

Executive pay and perks have been creeping up the agenda with politicians and the public increasingly questioning the rewards given to top CEOs when companies fail.

But should this be done well before any potential failure and in particular when highly paid executives are seeking support for the restructuring and reorganisation initiatives that is necessary when their company is in financial difficulties?

Leadership involves setting an example and when the chips are down this means making demonstrable self-sacrifices.

This week, the Financial Times reported that Standard Chartered bank CEO Bill Winters may have his total pay cut and Namal Nawana will be leaving his CEO role at Smith & Nephew after less than a year after investors turned down his request to increase his $6m package to nearer $18m-$20m.

But it is not only executive pay that has come under fire, this is also true of pensions and other executive benefits.

In September the influential investor group IA (The...

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Is an Employee Ownership Trust the way forward to show your workers they are valued?

In May this year Julian Richer gave his employees shares in the company through an Employee Ownership Trust (EOT) whereby they will own 60% of the business.

Announcing the decision, Richer said that he felt it was better to do it now he had reached the age of 60, than to wait until his death, as originally intended. This way, he said, he could ensure the transition would go smoothly.

Richer Sounds, the hi-fi and TV retail chain, since it was set up in 1978 has survived the last five recessions and is regarded as one of the best companies to work for.

Julian Richer’s success as founder and owner can very much be attributed to his commitment to his employees which includes initiatives such as an extra day of holiday on their birthday, heavily discounted access to holiday homes for all employees with over six month’s service, a month’s use of the company Bentley to the store that has scored highest on customer service each month and chiropody treatment and massages...

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Why advice to aspiring women leaders may have been all wrong

The numbers of women leaders are not rising despite the growing calls to eliminate gender discrimination in the workplace.

There are just six female CEOs of the FTSE 100 companies and at the start of the year The Equality Trust revealed that they earn 54% of their male counterparts.

Some years ago, Sheryl Sandberg published her book Lean In, in which she argued that women should show more drive and determination, put themselves forward for daunting tasks, and showcase the same level of confidence conveyed by male leaders.

But either aspiring women leaders have been ignoring Sandberg’s advice or, if they have followed it, it has not resulted in promotion.

The “lean in” advice may even be wrong according to personality scientist Tomas Chamorro-Premuzic, an international authority on psychological profiling, talent management and leadership development who argues that it could actually be counter-productive.

It is more likely, he says, that if women mimic the accepted...

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Are your staff loyal? Retaining valuable staff depends on how you treat them!

In a mature economy with an ageing population and amid rapidly-changing technology, businesses are finding it increasingly difficult to find the skilled staff that they need.

This makes it a buyers’ market for job seekers and the evidence for this has been mounting particularly in sectors such as construction, engineering, manufacturing and IT where wages are rising significantly above inflation.

In December a report from Barclays showed that only 6% of people aged between 16 and 23 wanted to work in manufacturing and official figures have also shown that workers are switching jobs in record numbers.

A BCC (British Chambers of Commerce) report based on a survey of 6000 businesses in January revealed that four fifths of employers in manufacturing reported difficulties in finding the right workers and in the services sector, which makes up nearly 80% of the economy, seven in 10 said they had struggled to recruit.

Persuading valuable staff to stay with your business

At the moment...

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Corporate boardrooms – a hostile environment for female executives?

Despite the depressing picture of a decline in the number of women holding senior executive positions in FTSE companies, there have in the past been many impressive female leaders such as Rani Lakshmibai, the Queen of Jhansi in India, who led her troops in battle (with her baby son strapped to her back) during the Indian Mutiny/First War of Independence in 1857.

In July this year the UK’s Cranfield Institute published the results of its 20th FTSE Women on Boards Report which reported a marked drop in the numbers of female CEOs (chief executive officers) and CFOs (chief financial officers) and other executives on the boards of FTSE 250 companies and that the numbers had remained static for FTSE 100 companies.

It found that there were 30 women in full-time executive roles at FTSE 250 firms, down from 38 last year, equating to just 6.4% of the total, and of these there were just six female CEOs and 19 CFOs.

Although the numbers of female executives in FTSE 100 companies had risen...

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Is the insolvency of your business a failure?

Like old buildings that are decaying or no longer fit for use, businesses often need to be pulled down and rebuilt. Should this be regarded as failure or renewal?

There are three definitions of failure in the Cambridge Dictionary: 

  • Someone or something not succeeding;
  • Not doing something that you must do or are expected to do;
  • Something not working or stopping working as well as it should.

Much has been written about the role of directors and how it contributes to the failure of a business but less about the lessons that can be learnt and how they contribute to the future success of entrepreneurs.

Failure is something the business writer and chairman of Risk Capital Partners, Luke Johnson, has written about and must have had further cause to reflect on following his injection of £20 million into Patisserie Valerie, which recently announced that it was in danger of imminent collapse after what may turn out to have been the subject of accounting and auditing...

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Leaders: Can you imagine turning off your phone when on holiday?

It is well-known that a third of SME business owners take fewer than 10 days off per year and on average work at least 50-plus hours per week compared with the average of 37 hours for employees.

Even those who do manage to take a holiday often keep in touch with their offices and would not dream of turning off the phone.

This is hardly likely to please your family or whomever you are holidaying with, but have you thought about the damage it may be doing to you and your business?

 

Why you should consider turning off your phone on holiday

The most obvious reason is that you need time to relax and recharge your mental batteries. You are hardly likely to be able to do this if you are constantly attuned to the possibility that you need to be available to answer questions by phone or email.

Many business owners also suffer from a need to be constantly in control of every aspect of their operation and find it hard to delegate to others in their organisation. This means that too many...

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How do you resolve a boardroom conflict?

It is not unusual when I am called in to advise a SME in distress on restructuring its business that I find that there is a conflict among directors.

Perhaps it is no surprise that in today’s trading environment there should be disagreements at board level about how to proceed, particularly during financial difficulties when people are under stress.

However, a successful turnaround plan depends not only on my thorough investigation of the state of a business, in terms of the numbers and the business model, it also needs the support of the board, suppliers as creditors and other stakeholders, not least the employees.

While a conflict among directors has the potential to undermine, damage and disrupt a business at any time, this is more so in a tight corner when leadership and a united team is needed to execute a turnaround plan.

Tools that can help to resolve a boardroom conflict

While every business, and every conflict, is likely to be unique there are some tools that can help...

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The pros and cons of team building activities for SMEs

There is considerable disagreement about the effectiveness of company team building activities, especially those that involve away-days for things like paintballing, go-karting, white water rafting and the like.

The question is whether team building activities away from the office will make a noticeable difference to your productivity, rather than simply to the bottom line of the businesses that offer such facilities.

According to Forbes Magazine, Kate Mercer, author of A Buzz in the Building: How to Build and Lead a Brilliant Organisation and a co-founder of the Leaders Lab consultancy, warns that such activities can actually damage your workplace because it takes a great deal of skill to bring out the learning points and to transfer them back to the workplace.

Not only that, she says, they can make some employees feel embarrassed and others feel patronised and too often they confuse socialising with actual team building activities.

Such exercises can also be expensive,...

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