I found myself rather enjoying the recent euro debate between Nigel Farage and Nick Clegg. I’d have thought that more of the same could help stem apathy among the voting public.
Of course, apathy isn’t limited to politics. We see this apathy among vast swathes of shareholders too. Few investors go to the AGM, or vote on key issues. Nobody really wants to rock the boat, and that means the management does whatever the heck they want.
In many ways, apathy is born of investor/voter disillusionment with the guys on top. It was a point I thought Farage made well. Distancing himself from the political elite, he berated what he calls the “career politicians”. These are the ones that have never done a proper day’s work in the real world.
Irrespective of political stripes, they look after each other and ensure there’s always “jobs for the boys” – be it on quangos, committees, or heck – even in Brussels. They’ve always got one eye on their career path, with the other trailing the needs of the electorate.
My kingdom for an MP’s pension
In business, you’ve got the career managers – nobody’s expected to be a real entrepreneur in these circles. And you’ll notice how the top brass establish a club too. They all sit on each other’s boards of directors, with supposedly independent director roles. These same people sit on the remuneration committees too. And that’s why they continually vote for pay rises, often irrespective of performance.
At least we can count on the government to keep things in check. In 2009, the Independent Parliament Standards Authority was set up to monitor and regulate MPs’ salaries. At the time, MPs were paid a basic sum of £64,766 – that’s now set to jump to £75,000 in 2015. That’s progress… right? And according to the Association of British Insurers, the average person’s life savings wouldn’t even buy one year’s worth of an MP’s pension. Hmm… nice work if you can get it!
When it comes to business, the “them and us” issue is described as the principal and agent problem. The problem being, management and ownership of the business is split – shareholders own the business, the managers manage it. They go forth with our chequebook and do as they please. Studies suggest things like corporate mergers and acquisitions are rarely positive for shareholders. So why do they do it?
Well, if you’re a manager, you want a bigger organisation to manage. More kudos, and most importantly, a step up the ladder on the remuneration scales your ‘independent’ mates use to assess salaries.
Don’t give the management free rein
Whatever you may think of Farage’s politics, one thing’s for sure; he’s come along and shaken up the political environment. The political elite have had to look more realistically at the real issues that concern voters. And that has to be a good thing.
I think the next area ready for a shakeup is the way MPs interact with the voting public. Clegg in particular needs to work on his delivery. In last week’s debate, he railed against Farage’s ideas, suggesting they were “pub discussion”.
What a put-down! It’s as if he thinks the public have no right to a voice, be it down the pub, or anywhere else.
When answering a question about the impact of immigration on public services, Clegg bungled a response: “that’s the problem when you’ve got people!” A Freudian slip, or worse?
The fact of the matter is, we’d all do well to get more involved in politics, and specifically, the politics of the businesses we own.
On a personal level, I try to get along to as many AGMs as I can. It’s an excellent place to eyeball the directors. This is especially important when you’re dealing with small businesses.
Decent company directors enjoy a bit of a debate, and tend to come across as open and willing to listen. It’s a jolly good sign! Poor boards do not welcome debate, and tend toward rhetoric instead (The Co-op Group?).
It’s time to take a more active role in our businesses. Don’t just leave it for the management to do whatever they like. Make sure you’re set up to receive your voting rights if your shares are held in a nominee account with your broker. And use them to vote! Go along to AGMs and get involved.
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