Leadership at every level: how business structures need to change
New leadership models are needed to make the UK a leader in global business, but they will also challenge the inequity of remuneration normsJohn Mann MP
Businesses can be put into three categories. First, there are transactional companies, which see financial transactions as king. These companies will contract out because it’s cheaper, without thinking through whether the quality of output from the people they brought in is as good as it would have been had they attempted to maintain a highly motivated, permanently employed workforce.
Many companies have reversed that concept because they realise that if you motivate people, as opposed to purely seeing them as a transaction, their production levels will be higher.
And there’s a huge amount of evidence behind this: unionised workplaces, for example, had higher productivity than those that didn’t have trade unions. Why? A lot of the fears and problems of the workforce were dealt with voluntarily by representatives of the workforce themselves, rather than landing on senior management’s desk and distracting them or lying untouched and damaging the company’s productivity.
That’s the first type of company – the weakest type – where everything is based on a transaction. This has increasingly become a fundamental weakness for British businesses.
The second type of company is the old boys’ network, whereby you appoint people who you like, know or whose fathers or mothers you know. This type of company is prevalent in many sectors of industry and commerce.
The political world is worse than anywhere for this type of organisation. The two political leaders who have been most effective at achieving what they wanted are Margaret Thatcher and Tony Blair. Interestingly, what both of them did was to employ people who weren’t like them.
They had staff around them who they didn’t like.
I saw first-hand that Blair was prepared to have people he was not comfortable with in with him at the heart of things, telling him what to do and advising him on how to do things. It was often very explosive, but it was counter to the old boys’ network that was, and is, so prevalent in politics and industry.
The third kind of business is a leadership-based company, where leadership is defined as telling other people: “You will make the decision, not me, because I am above you. You are authorised to do so and you aren’t going to work here if you don’t make that decision.”
What differentiates these from the other two types of business is the extraordinary amount of leadership needed at every level. This is the model that we ought to be promoting in this country, but it’s frightening for companies because remuneration is going to have to be more equitable.
If you’re saying to people at the ‘bottom’ of the company that they are expected to show leadership, you can’t have the difference in levels of remuneration that you have in the other two models.
This model is about empowering the workforce. It is behind the success of Silicon Valley, and it’s the one we must pursue in this country if we are to be a leader in global business.