GROWING PAINS

The UK economy, having enjoyed two consecutive quarters of declining economic activity (or ‘negative growth’ as economists like to call it) is in the throes of a double dip recession.  This unwelcome development sparked Austerity Central into action: “Since we’re in a rapidly deepening hole,” the Government said, “some folk should stop digging and go in search of growth, while the remainder (mostly public sector workers) should continue to dig.” Or words to that effect.

Increasingly politicians the world over now believe that only growth can save us from Armageddon, which I believe is a small town somewhere in the Eurozone.  Call me cynical, but wasn’t the naked pursuit of growth what got us into this mess in the first place?  Growth in bankers’ bonuses, in property values, in second homes and big, flat screen TVs.  But I digress. ‘Hair of the dog’, has been prescribed.  Growth is the new black.

Squeezed by growth, squeezed by a lack of growth.

There are only limited ways that growth can be created.

Real growth happens when people and businesses go out and spend money to buy more things.  Often, the money they’re spending is money they don’t have so they borrow it from a bank or credit card company.  This behaviour was fashionable in the period just before the global economic crash.  Because of this, gratuitous spending is seen as socially unacceptable these days and not an appropriate topic of discussion at dinner parties. Besides, the banks are a tad short anyway, so this is an unlikely route to growth today.

Then there’s market share growth where a business, through better service, smarter sales people, lower prices or better products, sells more of something than its competitors sell.  This is unlikely to have a material impact on the economy since market share growth for one business results in market share decline for another when the market isn’t growing.  A more sophisticated version of market share growth is export growth, a good example of which would be America selling Californian wine to the French. Sometimes referred to as a zero sum game, market share (or export-led growth) in a declining market is an illusory growth strategy.

Then there’s investment growth, where companies invest in the hope that they will get a return on that investment in a reasonable timeframe.  It might be capital-based (like buying new equipment, new facilities or the acquisition of a competitor), or operating investment (such as hiring new people to build a new line of business).  But investment decisions usually require confidence and confidence has gone to the same place as banker’s credibility.

Finally, there’s lazy growth. This is where businesses that sell us stuff we can’t really do without simply jack up the prices.  Energy and telephone companies are seasoned masters of this.  More commonly referred to as ‘inflation’, it has the benefit of being easily passed on by other businesses so every business can benefit.  The downside is that when people pay more for items like petrol, or food which costs more to deliver to the store, they have less money to spend on discretionary items like eating out, holidays or trips to the hairdresser.

The UK population grew by 0.8% in 2009/10, the fastest rate of population growth in over 50 years, but slightly slower that the world’s overall population growth during the same period, at just over one percent.

If economic activity mirrored changes in population, we’d have a natural rate of one percent growth. But one percent is too little to excite people in the City or Government. The higher growth rates required can only really come from increased consumption.  Rises in consumption creates growth in jobs.  Jobs create wealth and wealth creates further consumption, the virtuous circle that makes a businessman smile.  So buying a new car, a bigger TV or a new suit is a good thing, right?  Some will argue that it’s the best way to lift the world’s poorest out of poverty.

But rising per capita consumption is stretching the earth’s resources closer to breaking point.  Building societies based on rising consumption, where having more is being better, is simply not a sustainable model.  And that’s the rub.  Truly sustainable growth is growth that works for everyone, including the environment and, as far as I know, no one’s found the algorithm for that yet.

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WOULD I LIE TO YOU?

Maybe it’s the residue of guilt that comes from growing up in a catholic household but I’ve always struggled with lying. I’m ok with little white lie responses to questions like “do gruffalos really exist,” or “is everything ok with your meal.” However, if my opinion were ever sought on the matter, I’d have to explain to Mrs Beyonce Knowles-Z that her bum does look big in those.

Find any excuse to justify using a picture of Beyonce.

I had a few beers with a former newspaper reporter friend of mine last week.  Ten years ago he was a reporter on one of the broadsheets and I was running a PR department.  While I was on holiday, he called the press office to validate a story that would have been moderately embarrassing for the business and one of its senior executives if published – embarrassing, but not fatal.

The press officer he spoke to denied that the story was true. He unashamedly, knowingly and barefaced lied to the reporter. The reporter, trusting what the press officer told him, spiked his story.

No one benefitted from the press officer’s lie. Another national newspaper ran the story two weeks afterwards so the business and the senior executive were moderately embarrassed anyway.  No one died as a result of the story appearing, though the press officer was invited to pursue his career somewhere else.

As a member of the communications department, the only real currency you possess is your personal and professional credibility.  Your contacts, experience, intelligence and insight count for nothing if people inside and outside the business can’t trust what you say.  If you lose that trust, your work is done and your value spent.

My friend left journalism a few years after that to move to the dark side and work in public relations.  Despite the passage of time, he’s still pretty angry about the lie. We were only on our second pint when he raised the matter again.

Viewed through a wider lens, people today have had enough of people that lie.  When the economy was booming, the good times hid, but didn’t erase, a multitude of sins.

We now know that politicians lied about their expenses, newspaper executives lied about phone hacking and senior police officers lied about payments they received from the press for stories.  We also know that senior bankers lied about interest rates.

Restoring the fundamental foundations for a post-recessionary world is going to require more stringent levels of honesty, integrity and transparency within our institutions.  Those institutions’ communications departments have a critical part to play in rebuilding that trust between the institutions they represent and the public.  To deliver this, they need unquestionable levels of ethical standards.

Would I lie to you?  I won’t.  I might refuse to comment or be drawn on the subject.  Maybe I’ll withhold details that you haven’t asked me about. But I won’t lie.  I might add a little additional context – some might call it spin.

So if Mrs Knowles-Z looks disappointed with the first part of my answer, I could always add that lots of men I know and respect think that bigger is always more beautiful.

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WHEN BOSSES RESIGN TO GO

Some years ago, I resigned from a summer job in a bar. I did it by pouring a pint of London Pride over the landlord’s head. To be fair, he’d spat racist remarks in my face first and my reaction seemed less troublesome than calling an employment lawyer.  But whenever someone very high profile resigns, voluntarily or with the benefit of ‘encouragement,’ and with or without somewhere else to go, they’re usually trying to deliver a message.

The message might be something like: “I can no longer support the way things are done here,” or “I’ve outgrown this company.”  In other cases, the message is “mea culpa.” The mea culpas usually follow some ‘encouragement’ from others – the Board – for example, and a suggestion that they acquaint their shoe leather with the plank of public shame.

Bob Diamond talking to the Treasury Select Committee on Independence Day

It’s been a week for resignations.  When Marcus Agius, chairman of Barclays Bank, resigned on the morning of Monday, 2nd July after Liborgate became public, the message the bank wanted to get out was:  “A senior person has paid with his job, there’s nothing more to see here. Can we all move along now, please?”

Unfortunately, that message didn’t meet universal approval in the court of public opinion.   The next day, the bank tried a different message.  “Marcus Agius has un-resigned.  Bob Diamond has resigned. So too has Jerry del Missier (who? - ed).

The bank’s new message was “two senior people have now paid with their jobs.  Honestly, there really is nothing more to see here, so can we all please move along now?”  Bob Diamond’s high profile and televised appearance at the Treasury Select Committee yesterday afternoon begged to differ with the bank’s preference for an end to the story.

Then Rob van Persie, Arsenal striker, Dutchman and Barclay’s (yes, them again) Premier League player of the season for 2011/12, issued a sort of resignation threat on his personal website.

“The club and I don’t see eye to eye so I won’t be signing a new contract,” he sort of said.  His message was either: “come and get me,” to a new club, or possibly: “if you start to see things my way, than maybe we can talk again,” to his current employers.

Either way, resigning for the most senior executives is a serious business and not something that should be approached lightly.  The very least that will happen is the whispered debate about whether they jumped or were pushed.

Many executives use the threat of resignation as a tactic to get something that isn’t otherwise coming their way.  Sometimes the tactic works and they get what they want; other times, they get the opportunity to resign.

A good communications counsel who’s plugged into the various corridors of influence can advise the best route to take and how a resignation action is likely to play out.  They can also advise if staying put is realistic.

Had Bob Diamond taken the communications advice, for example, he may have resigned earlier that he did.  This would have saved Mr Agius the ignominy of resigning with a detailed mea culpa statement only to withdraw it 24 hours later, and creating a nightmare situation for Barclayl’s comms department to manage when the executives finally agreed on who was going.

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