Hail the kings of accountancy age

July 12, 1996

Charles Leonard argues that UK industry is struggling because it is frightened of taking risks. I was recently interviewed for a senior management post at a university on the south coast but was rejected after the first day of a two-day and, apparently, intensive process.

There were eight of us, all male, including two internal candidates who, when circumstances allowed, absented themselves to attend seemingly endless and very pressing duties. That left the six outsiders to get to know each other under the tense and nervous conditions that strangely contrive to promote a camaraderie among rivals.

Reports back from the management forum came every 15 minutes with the return of each hapless presenter. As we were all required to address the same topic, the forum became rapidly bored and it showed. Some candidates suggested that the forum was perhaps comprised mainly of middle managers who had themselves applied for the post on offer and had not been shortlisted.

When my turn arrived I outlined how higher education was being squeezed and how I could squeeze my colleagues as hard and as thoroughly as everyone else. Oh yes, I could be a real swine if necessary. This is what I hoped they wanted to hear but of course they would be the ones most affected and it is not really like me at all. In a few sentences I had committed hara-kiri and compounded the error by suggesting they all pay for their car parking. In reality, I am a sensitive and caring creature and although I do expect colleagues to do more with less under poorer conditions with one arm tied behind their backs, I have made it my business to appreciate their difficulties. Thus I frequently undertake downstream work just to remember what it was like to be at the chalkface with no chalk and no bulbs for the overhead projector.

It is this appreciation that creates teamwork and separates the good manager from the bad one. Decisions made from real experience are far more robust and sustaining than those made from an ivory tower. Unfortunately education in general and higher education in particular is now moving to bring in accountants to manage what is a big but shrinking business. Shrinking because public expenditure in the UK is under great pressure as we as a nation fail to earn and pay for our way in the world. Accountants are in the ascendancy because, like the National Health Service, corporate educational establishments are rigorously audited internally and externally.

The oh-so-important financial projections against strategic plans and outputs with anticipated reductions in income not uplifted for inflation and the mistaken belief that market forces are the only ones that matter have cast the public sector on a dangerous downward spiral. Unfortunately accountants are not usually risk-takers or entrepreneurs. They prefer increasing regulation and demand strict compliance with procedures. In other words, they do not like flexibility. Many institutions and their controlling boards of governors are looking for the cautious low risk, uninspired approach which will in no way jeopardise their future even if that future may be somewhat bleak and downhill. Like NHS trusts, colleges are now effectively run by their auditors. Throughout British industry and most of the public sector initiative and entrepreneurship are being suppressed, the accountants are taking over and we are moving from a market economy to an inverse command economy. Essentially, instead of working to a top-down plan, we have produced a bottom-up planning process but with the purse-strings being tightened from above. Thus the commands still come from on high but they are executed at local level by managers who are led to believe that they have devolved responsibility. At the same time, despite valiant efforts by some, the international competitiveness of British industry continues to worsen because we are no longer prepared to take risks. Research and development spending has hit an all-time low and is less than half that of our international rivals.

In addition notable and much publicised business failures, of which Stephen Hinchcliffe's Facia Group is the most recent example, have undermined our faith in the entrepreneurial approach to the detriment of us all. It seems there are comparable horror stories looming in the universities but it is practically impossible to sell off or even close these institutions which will just have to lose staff or merge. While there must be controls on entrepreneurs whatever their sector, confining them within a small cage of operation is not the answer.

That the national strategic plan set in the now annual White Papers on competitiveness have failed to deliver the required changes is hardly surprising given that we do not underpin them with the right resources. The network of Training and Enterprise Councils and Business Links may look impressive but all government has created is a mammoth one-stop shop monopoly that has cut out all the other, vital players. All the terminology is about enterprise, incentive, risk-taking and entrepreneurship but then who will back a good idea? Very few it seems.

Thirty years ago, the great American physicist and Nobel Prize winner Richard P. Feynman asked the Japanese ambassador what made Japan such a successful and economically robust nation? Was it better brains, more risk-takers, better marketing? No, the ambassador said it came down to education. Education is put on a pedestal and if the state will not do it the parents will. Thus Japan has an excellent education system that, due to customer demand, continues to improve.

While we look enviously at Japanese industrial practices and try to mimic them, we have found to our great cost that there is no quick fix for the malaise in British industry. The long-term solution is to fund education properly and ensure that we make the most of our human resources. How we elevate teaching and learning to the heights it enjoyed in past ages is a matter for the politicians and the profession itself. However it is essential that something is done and done quickly because trying to re-educate people in later life in the absence of a proper and sound foundation is a forlorn, difficult and often hopeless task. If nothing else, it is just not cost-efficient.

Back to my interview. The moment of truth had arrived and I was called into the office of the director of human resources. "Bad news, I'm afraid," he said, "we had to choose three to go forward and you came fourth. The board wants certainty and caution, you just look too commercial." I expect that is what all failed candidates are told. It is supposed to make you feel better about failure, but in that moment my eyes were opened and I knew exactly what was wrong with UK plc. I have decided to retrain as an accountant. I wonder if the local TEC can help?

Charles Leonard is director of commercial affairs, Coventry University.

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