Scotland
Winter 2012 www.iodscotland.com
Published for members of the Institute of Directors in Scotland
IoD Conference 2012:
High-fliers plot a route to economic growth Full report inside
Special features:
Flooding risk: Businesses urged to be prepared Action needed to balance gender in the boardroom
Last call for Director of the Year nominees: Enter now – see inside or go to www.iodscotland.com
PLAYING MUSIC? MAKE SURE YOU’RE LICENSED.
Music creates a better working atmosphere 77% of businesses say playing music in the workplace increases staff morale and creates a better working environment.* If you play music in your business, it is a legal requirement to obtain the correct music licences. In most instances, a licence is required from both PPL and PRS for Music. PPL and PRS for Music are two separate companies. PPL collects and distributes money for the use of recorded music on behalf of record companies and performers. PRS for Music collects
and distributes money for the use of the musical composition and lyrics on behalf of authors, songwriters, composers and publishers. A PPL licence can cost your business as little as 19p per day. For more information on how to obtain your PPL licence visit ppluk.com or call 020 7534 1095. To ďŹ nd out more about how music can work for your business visit musicworksforyou.com. *MusicWorks survey of 1000 people, conducted May 2012.
ppluk.com
Chairman’s welcome
The business case must carry the most weight The question of independence is now open for debate – and for the IoD, it’s strictly business, as usual, says chairman Ian McKay
“N
ow this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” I don’t often quote Churchill but his comment on the victory at El Alamein might apply to the great referendum debate. The UK and Scottish Governments have stopped strutting long enough to agree the mechanics of the referendum. The Electoral Commission has become engaged in the process. The opposing camps have chosen their champions. Perhaps we have at least got the beginning out of the way. However, two things remain uppermost in my mind. The first is the most common thing our members say to me: “Where is the data?” IoD has taken the view from the outset that business’s attitude on this should be the same as for any other important proposal. Demand of both sides – what’s the business case; show us your due diligence. We are now beginning to see important issues emerging for trade and business but we are not seeing proper answers from either camp. Instead we tend to have assertion answered by counter-assertion. The financial community is rightly beginning to ask what the financial picture would look like under an Independent Scotland. Matters such as the currency we will trade in, how interest rates are decided and who will regulate our financial institutions have all been big issues for some time, and they are no less important for the world post-2014, whatever the constitutional outcome. If we are to have a grown-up debate on
these matters we need some certainty, not just assertions and assumptions. The facts won’t necessarily favour one side or the other, but they would make the voters’ task easier and remove some of the uncertainty. My second thought is something I first saw on a student anarchist poster in the 1970s: “Whoever you vote for, the Government will get in”. We are in danger of thinking this debate is all about structures, geography and governance. We should remind ourselves that what matters most to business is not the layer of governance or the political colour of the majority party but the policies the Government pursues. More specifically for us, it is how Government policies affect the economy and business environment. What can we expect from each side on infrastructure, on promoting efficiency in public spending, on removing the still stifling burden of procurement and planning red tape which deters development, on encouraging start-ups and new ideas for trade and growth among our ever-thoughtful young people and young companies? It seems sensible to judge a Government by what it does or intends to do, not by its jurisdiction. Finally, a plea to IoD members. We had a very successful IoD Scottish Conference earlier this month. I was able to announce that the event was some 40 per cent bigger than the year before and this came on the back of a sell-out Director of the Year Awards Dinner earlier in the year and our membership having reached its highest level for over two years. It is great to see us moving forward. But it will only really begin to matter if we can consolidate that position. Next time you are meeting with someone you rate in business, ask them if they are an IoD member. If they haven’t joined yet, tell them it’s time they did. We have some of the best of Scotland’s business leadership in our organisation – it’s time we got the rest of them in, too.
Contacts & details Executive Director: David Watt iod.scotland@iod.com Web www.iodscotland.com or www.iod.com/scotland
IoD Scotland is the official membership magazine of the Institute of Directors and is published on its behalf by: Chamber Media Services, 4 West Park Road, Bramhall, Stockport, Cheshire SK7 3JX.
Address IoD Scotland: 29 Abercromby Place, Edinburgh EH3 6QE
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Although every effort is made to ensure the accuracy of material contained within this magazine, neither IoD Scotland nor Chamber Media Services can accept any responsibility for omissions or inaccuracies in its editorial or advertising content. The views expressed in this publication are not necessarily those of the IoD. The carriage of advertisements or editorials in this publication does not constitute an endorsement of the products or services advertised. Cover picture: Willie Walsh lashes the Government over APD at the IoD Scotland Conference. Picture – and all the rest of the Conference coverage – courtesy of Steve Elliot, Art24.
IoD Scotland Winter 2012 | 03
Executive director’s view The recent IoD Scotland conference set our nation’s business leaders an ambitious target, says IoD executive director David Watt The past few years have clearly been difficult for the Scottish economy, and despite the welcome news that the UK is now officially out of recession, for many businesses north of the Border it doesn’t feel like it’s time to celebrate just yet. The number of new firms starting up in Scotland is on the increase, and there are now numerous initiatives to help kick-start business growth and stimulate investment. These include Scottish Enterprise’s “Yes to Growth” campaign, which is encouraging existing firms to grow, following on from Business Gateway initiatives and the ongoing success of the Prince’s Trust Youth Business Scotland. Thanks to the Scottish Funding Council’s agreement with our universities and colleges to focus on employability and entrepreneurial stimulation, there’s a growing awareness among young people about the opportunities available to start their own business – and in turn stimulate the economy and create jobs. Although our business leaders have been steering through choppy waters for some time, they realise that what it takes to survive the storm is strong leadership and direction. There’s still some way to go until confidence returns, but it’s important we don’t lose sight of the fact that there are still opportunities out there. Our traditional markets are all feeling the strain, but there are many countries across the globe that continue to prosper and represent an opportunity for Scottish companies.
Tell us your views on Scotland’s big question
04 | IoD Scotland Winter 2012
Entrepreneurs and leadership are vital for our future growth Strength of leadership is something that has come to the fore because of these challenging circumstances, and Scotland’s business leaders certainly haven’t backed down. This is why we chose leadership and entrepreneurialism as a key focus at our recent annual conference: Building Scotland’s Economic Future – and your role in it. In a fiercely competitive global economy, Scotland’s prosperity depends on our success as an outwardlooking and enterprising nation. We need to set ourselves ambitious targets for growth, and the onus is on us all to show the necessary leadership to help build a stronger economic future for the country.
‘In a fiercely competitive global economy, Scotland’s prosperity depends on our success as an outward-looking and enterprising nation’
Independence: What are your key questions? The IoD in Scotland is keen to debate the question of independence with politicians and others on either side of the argument. But before we speak to the officials in charge of the campaigns, we need to know what the key questions are for you, our members, and what you think. What are your key issues? Which areas do you need clarification on? What questions should we be asking on behalf of the business community? This is going to be the biggest single
topic in Scotland throughout 2013 and on to the referendum itself in 2014. Feed your thoughts to David Watt, IoD Scotland executive director, on iod.scotland@iod.com. In the early months of 2013 David will also be coming to a venue near you to listen to your opinions face-to-face. Details for these lunchtime events will be available at www.iodscotland.com. They will be coupled with a breakfast examining the roles of non-executive directors.
IoD membership services
Switch and save with IoD energy service Members can save money on their energy bills with the IoD Energy Switching Service. During these challenging economic times and following the recent energy price rises, now is the time to act and implement savings wherever possible. The IoD Energy Switching Service, provided by energyhelpline, can help members reduce their gas and electricity bills. A dedicated team of energy experts will search the vast majority of suppliers on your behalf, to find you competitive rates – saving you both time and money. Businesses could save over £1,000 a year*, which could make a considerable impact to your overheads. All industry types can benefit from this service and recent successes include:
• a sandwich maker, saving £863 per year • a nursery school, saving £1,127 per year • an architect’s firm, saving a whopping £4,471 per year Many businesses are unknowingly paying over the odds for their energy needs, or may think that it is too difficult and timeconsuming to enter negotiations with suppliers. This service takes care of the hard work for you and can often access special rates that aren’t
available by going direct to the supplier yourself. To save on both your business and domestic energy bills, use this free service and get a no obligation quote today: t: 0800 634 5194 (business energy) t: 0800 634 3875 (domestic energy) w: www.iod.com/energy * At least 10 per cent of businesses that switched using energyhelpline between May – August 2011 saved over £1,000 and at least 10 per cent of domestic households that switched between January 2011 – March 2012 saved over £300.
IoD-Hertz affinity deal puts members in the service fast lane “It is all about time – the most important resource for us all – Hertz helps you save it, not waste it...” by David Watt IoD members benefit from a number of excellent affinity partnerships which are designed to enhance the value of membership and make their busy lives just a bit easier. A great example of that is the Hertz car rental relationship and I must say that I’ve been delighted with the Hertz #1 Club Gold Service ever since I enrolled. I travel a lot due to the nature of the work I do at the IoD and other personal and leisure interests. I’m often out and about, travelling to meetings, talking to business leaders and supporting their activities. My travel needs can be demanding, and I expect a lot from a car rental company in terms of efficiency and reliability.
Hertz #1 Club Gold addresses the biggest drawbacks I’ve experienced with car rental in the past, including the time-consuming process of reserving a vehicle, collecting it and returning the vehicle. Hertz #1 Club Gold also reflects a commitment to speeding up your service, and that makes for a fast and stress-free experience. I can make a reservation online very quickly, as all of my personal details are stored securely in my profile. That is only the beginning; the fact that I can bypass the queues and paperwork at the rental counter is a complete revelation. The first time I used Hertz #1 Club Gold I was pleased to find the keys and my rental agreement waiting for me in my hire car. No waiting around – all I had to do was turn up,
make my way to my designated car park bay and I was ready to set off for my next meeting. Returns have been streamlined too. I’m now used to being greeted by Hertz staff, ready and waiting with handheld computers to process my return in seconds. It is all about time – the most important resource for us all – Hertz help you save it, not waste it. The bonus is that this service and speed applies all over the world, even on holiday breaks, and comes at a cost which is very good value. I really can recommend it very highly. If a ‘faster way to rent’ is what you’re looking for, I suggest you look no further and get yourself signed up immediately! n See www.iod.com for more details
IoD Scotland Winter 2012 | 05
IoD membership
Deadline looms for IoD Scotland Director of the Year Awards Deadline for 2012 awards is on Friday, December 7 Enter or nominate a fellow director online at www.iodscotland.com
T
He deadline is looming for entries to the 2012 IoD Scotland Director of the Year Awards, with the closing date for all nominations Friday, December 7. We’ve had a superb response to our awards this time, with a number of high-profile entries and nominations of industry leaders from a number of sectors. But there’s still room for more – though time is tight. If you want to enter, or nominate a director whose leadership is making a real difference to Scotland, then go to www.iodscotland.com and follow the links to the nominations page. With the continued economic uncertainty shrouding many business and organisations, it’s never been more vital that we celebrate those who are leading the way. We need to highlight directors who are providing the best leadership in Scotland, to applaud their success and raise them up as a benchmark against which others can judge their own records. Our awards pay a fitting tribute to their achievements. The IoD Scotland Director of the Year
06 | IoD Scotland Winter 2012
Key Dates:
» Nominations open: NOW » Deadline for entries: Friday, 7 December 2012 » Finalists announced: Friday, 22 February 2013 » Awards Ceremony: Thursday, 21 March 2013 » Venue: Crowne Plaza Hotel, Glasgow Awards are open to all Scottish directors, or equivalent level, executive and non-executive, whether or not they are IoD members. They focus not simply on individual achievement but also on the importance of the director’s role in the community and the commitment and expertise they contribute to businesses of all sizes at national and at global level. The benefits of entering extend beyond picking up one of the prestigious trophies; the shortlisted finalists will have a raised profile in the Scottish business arena via a media campaign and through the network of the IoD, and their finalist status will bring credibility and recognition to their company before and after the ceremony at the Crowne Plaza Hotel in Glasgow on Thursday, 21 March 2013.
To nominate is simple...: complete a brief online form, submit a 200-word executive summary and a copy of your nominee’s latest annual report. Full online nomination and booking details can be found on www.iodscotland.com. The nominating process may be simple but the judging is rigorous, which is why the IoD Scotland Director of the Year Awards are held in such high regard. Thriving businesses are the powerhouse of the Scottish economy. These awards are our opportunity to applaud the energy and commitment of those individuals who are driving success in enterprises large, small, established and new, across Scotland so let’s nominate them now ......
For further details, please email awards@ firstcityevents. co.uk or call 07721 530115.
Winners all: The victorious directors from the 2011 awards
Presenteeism: tackling the growing risk to business “It was as if the lights were on and no-one was at home,” said the manager of a well-known Edinburgh company. “In a matter of weeks, a key member of my staff had gone from being a fantastic team leader to being uncommunicative and making serious mistakes.” The manager had never heard of presenteeism, but Wendy Bates, Business Manager of resolve, explains that many businesses are experiencing the effects of this growing trend, where employees continue to work despite being unwell. “The increase in presenteeism may be caused by fears over job security in the present economic downturn, but whatever the reason, it poses a threat to business as an employee that doesn’t feel well is unlikely to perform well at work,” said Wendy. Depression was recently named the most common UK illness by a GP poll*, with 1 in 10 people currently undergoing treatment. Recent research carried out by the CiPD** supports this
Damaged goods: Stress will have a detrimental impact on employees’ workforce performance
finding and states that stress-related absence and instances of mental illness in the workplace continue to rise. Wendy continued: “Fortunately, there are a number of routes open to employers to support
the wellbeing of their employees and minimise instances of presenteeism and absenteeism caused by stress and other mental health issues. “resolve works with businesses to both manage stress and promote positive mental health. We train managers to spot the early warning signs of stress and help them to develop strategies for managing it. “For employees experiencing stress, anxiety or depression we offer personalised support to overcome their issues and increase their productivity at work. Dealing with presenteeism outside of the workplace reduces the pressure on managers and allows them to concentrate on running the business.” *Figures gathered from 8,000 GP practices and published by the Health and Social Care Information Centre **Charted Institute of Personnel and Development Absence Management Survey 2012.
Presenteeism: a greater risk
to your business than absenteeism?
Textiles plant investment welcomed by IoD director IoD Scotland executive director David Watt was a guest when WL Gore & Associates invited VIPs to help open its refurbished Livingston textiles plant. Other guests included Fergus Ewing MSP, Minister for Enterprise, Energy & Tourism; Graeme Morrice MP, Cllr Tom Kerr, Provost, West Lothian Council and Neil Findlay MSP. David was delighted to be given the chance to look round the plant and see for himself the level of investment that has taken place. “WL Gore & Associates’ investment into this plant is a positive sign for the local and national economy. It shows the company has confidence in this plant and its workforce, and is looking forward to a period of growth.” Other guests at the event are pictured above, from left: Kirsty Boe, Scottish Enterprise; Graeme Morrice MP, Livingston; Fiona Maclachlan, SDI; Cllr Tom Kerr; David Watt, IoD Scotland; Neil Findlay MSP, Lothian Region; Fergus Ewing MSP, Minister for Enterprise, Energy & Tourism; Lynn Pearson, Human Resource, Livingston Kirkton plant; Justin King, Plant Leader, Livingston Kirkton plant; Colin Ormiston, Head of Finance, Livingston Kirkton plant; Bob Doak, Director of Gore UK. Kneeling: Douglas Thompson, Champion of the refurb project, Livingston Kirkton plant.
Research has shown that more and more people continue to go to work despite being unwell. Stress, depression and anxiety are increasingly common causes of mental and physical illness.
resolve
helps employers to reduce the hidden costs of presenteeism and stress and promote a mentally healthy workplace through tailored wellbeing services, including: • stress awareness information sessions and training • guided self-help for employees to develop strategies to manage stress • counselling to explore concerns in more depth • one-to-one support for employers/managers to tackle stress in their workplace. For further information and details of our Breakfast Briefings on Stress in the Workplace please get in touch or visit our website.
resolve MWB Business Exchange, 9-10 St Andrew Square Edinburgh EH2 2AF t: 0131 718 6003 e: support@resolvescotland.org.uk w: www.resolvescotland.org.uk resolve is funded by the Scottish Government’s Enterprise Growth Fund and is part of Health in Mind, registered Charity: SC004128
IoD Scotland Winter 2012 | 07
Branch news
Branch is determined to get Aberdeen’s message out by Mike Bowyer IoD Aberdeen chairman
A
s the new chair of the IoD Aberdeen branch my first priority is to continue to build on the good work of my predecessors. In these difficult financial times membership organisations are finding it increasingly hard to recruit new and retain existing members. People have a choice about where they spend their hard-earned disposable income and will weigh up where they can achieve the best value for money. Our challenge, therefore, is to ensure that at a local level we, the Aberdeen Committee, play our part in delivering value to members. Our main avenue to doing this is through our annual programme of events. These events provide an opportunity for sharing and learning and for members to engage with the committee and their peers and so our objective is to ensure these are high quality, relevant and provide sufficient opportunities for networking. So far this year we have held a number of excellent membership events. The first was a visit to Ace Winches headquarters near Fyvie in Aberdeenshire. Alfie Cheyne, the CEO and owner of Ace Winches, was the regional winner in the IoD Scotland Director of the Year Awards and he shared some fascinating insights into the Ace Winches story and his recipe for success. His company is now a major exporter of products and services, he said, and clearly it continues to go from strength to strength. We then had a tour of the facilities before Alfie and his wife and fellow Ace Winches director Valerie joined the IoD group for a buffet supper at a nearby hotel and continued to engage in discussions with us. The second event was an influencers’ dinner at Aberdeen Exhibition and
Conference Centre (AECC), which was jointly hosted by AECC and ScotRail. Following an excellent dinner, Brian Horsburgh, MD of AECC, and Steve Montgomery, MD of Scotrail, spoke about Destination Management and how companies can work together to maximise opportunities. I believe all who attended thought it was a great night. Finally, November 15 saw us hold a lunch event at which Andrew Griffiths, the Acting Head of Service (Education & Staff Development) for Aberdeenshire Council, discussed the “Curriculum for Excellence” and explained how this programme may assist in addressing the future skills requirements of businesses in the region. The Aberdeen committee is now very close to finalising the programme for the first half of 2013 and these events will shortly be posted on the IoD website. Keep an eye on www.iodscotland.com for more details. Although from time to time members of the committee will engage with politicians and the media to represent broader membership interests on key issues, where possible we endeavour to provide members with the opportunity to engage directly with decision makers. A recent example was an engagement session on the Scottish Budget with the Scottish Minister for Energy, Enterprise and Tourism, Fergus Ewing MSP. Although we only had two weeks’ advance notice of his visit, a joint engagement session was arranged which included members of the IoD, the Federation of Small Businesses and Aberdeen & Grampian Chamber of Commerce. Due to time constraints, invitations were issued to a cross-section of membership from each organisation and
“
These events provide an opportunity for sharing and learning and for members to engage with the committee and their peers and so our objective is to ensure these are high quality, relevant and provide sufficient opportunities for networking
“
08 | IoD Scotland Winter 2012
in total over 30 business men and women from the area attended the event. The event was so beneficial that we hope to arrange a series of follow-up sessions with the minister over the coming months. Although much of the UK continues to be hard hit by the recession, the Aberdeen and Grampian area has remained relatively buoyant, fuelled (if you will excuse the pun) by the region’s considerable involvement in oil and gas-related activity which tends to be more affected by global demand for hydrocarbons than by recessionary pressures. The region makes a substantial contribution to the UK economy in the form of taxes paid by the oil and gas producers as well as by the supporting service sector. In fact, Aberdeen and the surrounding area contributed somewhere in the region of 30 per cent of total UK corporation tax receipts in 2011. Add to this is a contribution in the region of £40 billion to the UK’s balance of payments and you get some indication of the impact and the importance of sustaining a strong oil and gas presence in the region. The Aberdeen committee will continue to do all that it can to reinforce this message to politicians and the general public.
The IoD in the Highlands & Islands
IoD Glasgow
IoD providing leadership to business community
Membership boost for Glasgow
The IoD, with sponsorship from Highlands & Islands Enterprise, organises five Leadership Lecture events each year. In the past these were held in Inverness, but over the past two years, in response to requests from members and the wider business community, we have expanded into other areas. In 2011 we held events in Thurso, Elgin and Inverness and so far in 2012 we have held an event in Thurso and one in Inverness, with a Fort William event to follow soon. We’re planning to carry this programme on into 2013, with repeat visits to Elgin and Inverness. These events prove to be very successful with high-calibre speakers such as William Dowson of the Bank of England and Minister for Enterprise and Tourism - Fergus Ewing. The proceedings always begin with a free, open lecture from our speaker, followed by a dinner with invited guests who are prominent in the local area. The discussions can be diverse but very interesting. In addition, we organise and hold an economic dinner in the summer where invited guests and high-profile business leaders, IoD leaders and
by Laura Gordon IoD Glasgow chairman
“These events attract high-calibre speakers – William Dowson, from the Bank of England, Fergus Ewing, MSP”
Ministers/MSPs join us for a round-table discussion on the economy. This is a very successful event, eagerly anticipated and is always oversubscribed. Our interim chair, Paul Houlden, is currently actively looking at re-convening the Highlands & Islands committee of the IoD. This had been effectively disbanded previously but it seems that we have the numbers and the willingness to get this going again. This would allow us a way to work together as an area, which we know won’t be easy as the area we cover is vast, diverse and sparsely populated. Because of this meetings and events are held in Inverness or UHI partner colleges but of course, by working with HIE & the University of the Highlands & Islands, we are able to utilise video conference facilities and additionally to record our events on to DVD for dissemination via the internet. However, Paul is keen to involve all members and is actively looking at encouraging as many from outlying areas as possible to get involved in meetings and activities. The benefits of us getting together and networking could be very worthwhile and mutually beneficial. It would be good to know who our fellow members are and discuss how we could help each other. So keep your eyes on this magazine and the IoD Scotland website for up-to-date information.
Summer seems a long time off but we’ve managed to pack in quite a few great events and are still increasing the membership in Glasgow and the West of Scotland. We pride ourselves on the variety and diversity of events we host, trying to appeal to the broad tastes and interests of our members. We had an incredibly successful whisky tasting courtesy of Glenfiddich and dinner at Two Fat Ladies at the Buttery to start our post-summer season. Attended by around 40 ‘connoisseurs’ we enjoyed wonderful hospitality, some great networking and a fascinating insight into the food and drink and hospitality sectors. Thanks to Professor Sir Jim McDonald, University of Strathclyde, and Macroberts LLP, members and guests heard about the energy challenges Scotland faces, while just last month we were given an up-to-date account of directors’ duties and responsibilities by French Duncan and Bellwether Green. We’ve also learned about the skills around communication and powerful conversations from Heather Campbell of CommsMasters, helping leaders to manage conflict, maximise team performance and ultimately improve productivity and turnover through effective communication. Finally, I myself spoke at an event at TMLewin – entitled ‘Dress to Impress’ – on the importance of personal branding, and the role that appearance, behaviour and communication have to play in creating presence and impact in the workplace. We have several events to come this year including our Annual Christmas Reception at the Blythswood Hotel on 12 December from 6-8pm and we hope to continue the success of previous years with wonderful hospitality, great networking and a prize draw, which this year is in support of children’s cancer charity Clic Sargent.
IoD Scotland Winter 2012 | 09
Conference report 2012
It’s time to target growth, says IoD conference S
COTLAND can look forward to a brighter economic future – but only if its business leaders demonstrate bold and inspiring leadership, prove themselves capable of motivating their people and are not cowed from taking brave decisions by a fear of failure. That was the message to members from the IoD Scotland Annual Conference, which attracted record numbers this year. High-profile speakers from a range of business sectors offered their own views on the conference theme – ‘Building Scotland’s economic future – and your role in it’. Opening the conference, IoD Scotland chairman Ian McKay urged delegates to look outside the country for future growth: too few Scottish companies were engaged in overseas trade, yet those with broader ambitions, such as bus and coach manufacturer Alexander Dennis Ltd (ADL), were proving it was possible to break out of domestic markets and establish yourself as a global player despite stiff competition from around the globe. ADL’s stunning success offered a blueprint for success
across Scotland, conference was told in the morning session. Delegates also heard an outline of plans to increase Scotland’s global transport links and improve access to faster broadband: further positive signs of a return of confidence. In the afternoon session, Scottish RFU president Alan Lawson drew comparisons between leadership on the sports field with that in the boardroom, before conference was closed by the IoD’s director-general Simon Walker, who offered his take on the current economic picture and reminded Government of its promises on coming to office to back business, cut red tape, inspire confidence and generate economic growth. Earlier, presentations by entrepreneurs who had been supported by the Prince’s Trust Youth Business Scotland highlighted the continued need to back fledgling businesses, while the day was rounded off in memorable style at the evening’s Annual Dinner, at which Glasgow facilities management entrepreneur Sir William Haughey of City Refrigeration launched Youth with Hope, an exciting project to reduce youth unemployment in the UK.
‘‘
Only honest and transparent leadership will help build confidence in the Scottish economy” Sir Michael Rake
Morning session:
The hi-tech route to growth, by Sir Michael Rake If Scotland was to rediscover its economic strength, its business leaders had to embrace a new era of leadership in which honest, transparent communication with its stakeholders was essential. That was the view of Sir Michael Rake, chairman of BT, who joined Willie Walsh, chief executive of the International Airlines Group and Colin Robertson, CEO of Alexander Dennis Ltd in a high-profile opening session that plotted a path to a stronger economic future for Scotland. Sir Michael placed access to superfast broadband as central to future growth; his company was working to ensure two-thirds of the country was connected to fibre optic cabling by 2013, and plans were well advanced to expand this into the Highlands and Islands. However, Scotland’s continue lack of competitiveness remained a concern. He compared the country with the North East of England, which traditionally performed less well than Scotland in education but had far greater productivity.
10 | IoD Scotland Winter 2012
Improving competitiveness would boost growth – and this was the only way forward, as we couldn’t repeat recent mistakes and “buy our way out of this recession” as we had in the past. Weak growth in the US economy was particularly concerning as the country remained the key driver of the world economy. From a British perspective the continued anaemic performance of the Eurozone was also a concern: this would continue until the current “game of chicken” ended between the stronger economic nations led by Germany and the weaker economies of the south over the future direction of European economic policy. Unemployment and job creation remained top priorities throughout the EU – but a sharp eye needed to be kept on inflationary pressures. Confidence was vital, he added. The economy had caught a cold in 2008 that had been 10 years in the making and it could take a similar number of years for the economic picture to improve unless Governments could bring confidence back to the business world.
Business first: From left, IoD Scotland chairman Ian McKay with conference keynote speakers Willie Walsh, Colin Robertson and Sir Michael Rake
Morning session:
APD’s a travesty, but BA will always back Scotland He was scathing in his criticism of the Government’s air passenger duty – an issue which had produced a rare moment of agreement between BA, Virgin, Ryanair and Easyjet, he said. Introduced by Chancellor Ken Clarke at £5 a flight as a ‘green tax’ it was now adding hundreds of pounds to family holidays, and evidence was growing that it was making the UK an uncompetitive place to do business. Mr Walsh’s trips to Asia had highlighted growing concern over this tax, and he compared the UK position with that of the Netherlands, where an analysis of the impact of its own APD had resulted in the Government scrapping the tax. How could the UK compete internationally when 22 out of the 27 EU nations didn’t levy such a tax, he asked. Scotland was doubly punished by the tax, as it was paid on flights to Heathrow and then again on connecting journeys – and he suggested that this was an area where independence could help Scotland in the future.
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On independence: It’s a hard-nosed business decision: ignore the emotional side, ask will Scotland be better off? I think there’s a strong case for Scotland”
‘‘
Willie Walsh, former chief executive of British Airways and now CEO of its parent company, the International Airlines Group, reassured delegates that Scotland remained central to BA’s plans after taking over BMI’s routes into and out of the country – and suggested the position could be even brighter in a future independent Scotland. BMI’s demise had been inevitable after it posted a loss of E200m on a turnover of fewer than a billion euros, resulting in its owner, Lufthansa, withdrawing its support. BA had stepped in to take on its routes and would continue to support Scotland – “as long as you want us here.” He claimed rival Richard Branson’s recent forays into the domestic market as ‘smacking of opportunism’ – as Willie pointed out, he had been calling on businesspeople to use the train for years for environmental reasons, and his long-time commitment to Scotland was questioned. In comparison, BA was flying 56 flights a day to London from airports across Scotland, and played a major role in helping Scottish businesses establish global links, particularly in the oil and gas industries.
Willie Walsh
Ask what will it do for entrepreneurs and job creation. That’s vital.”
Sir Michael Rake
Networking - delegates catch up during a break in conference
IoD Scotland Winter 2012 | 11
Conference report 2012 Morning session:
Put customers first... and listen to their views
ADL knows the route to global sales success
L
istening to customers and putting their views’ first had been instrumental in the turnround in the fortunes of one of modern Scotland’s biggest success stories, Alexander Dennis Ltd. CEO Colin Robertson told conference that the bus and coach maker was on its last legs – and in administration – when he was appointed in 2004, but by establishing a new, more dynamic management team, being honest with employees and customers and listening to what the market wanted, the company had been turned round. Today the company has been transformed into a growing force in the sector, capable of competing against global giants such as Volvo and MAN, entering new markets and on target to be a billion pound business by 2020. His first days with ADL had been challenging. Customer expectations were low; too many clients had been let down on delivery times and by shoddy reliability, and after sales support was poor. Colin took a huge amount of criticism from key accounts but vowed to place their comments at the heart of a new business, which put customers first. He kept staff informed. One of the surprises awaiting his arrival at ADL, Colin said, was that staff had been kept better informed as to the company’s plans by its
administrators, Deloitte’s, than at any time previously. It was clear that staff needed goals to work to, and were desperate to play their part in turning the business round. With a new management team in place, quality standards were improved, after-sales care was radically restructured and new products introduced that met modern needs for lower carbon emissions and better economy. With fuel costs rising globally, it was these new products that had been the key to unlocking new markets. Beginning with Commonwealth countries such as Australia and New Zealand, overseas sales now made up nearly half of ADL’s business. Expansion into the US and Asia had followed. The market remained challenging: it was vital that ADL never took its home market for granted, as had happened in the past, and that delivery times remained accurate, reliability good and service excellent. However, the key lessons were that if you don’t grow you die; that staying in your comfort zone might seem attractive but would result in complacency, and you needed tension in your business to flourish. Good people were vital but for them to share your values, it was vital you communicated regularly and clearly, he added.
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We introduced a new dynamism to the management team... it wasn’t hard...” Colin Robertson
Conference workshops Delegates were invited to attend one of four workshops during conference, covering a wide range of topics but all connected to the themes of leadership and growing the economy. u Gary Townley from the Intellectual Property Office gave his audience an explanation of the rules governing copyright, trade marks and patents – much of which was clearly new to the attendees, if the number of questions raised was anything to go by. There appears to be particular confusion over who owns the rights to websites, company logos and other marketing materials where outside agencies or freelancers are engaged – unless the contract clearly states otherwise, they do, was the simple answer – and the need to register patents properly was stressed.
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u The need for increased creativity in design, innovation and leadership was highlighted by the UK Treasury Cox Report – but how do you transfer these good intentions to the workplace? Professor Norman McNally and John Flitcroft from Glasgow School of Art identified the common confusion over ‘creativity’. It is common for business to see creativity and the related area of design as largely concerned with aesthetic considerations such as style and appearance. However, creative businesses are creative throughout and they showed, through an interesting exercise using photographs, how to ignite the collective creative side of an organisation, unlock hidden value and increase energy, confidence and perspective to build increased competitive advantage.
u In the current economic climate, leading teams was very challenging. Robin Lawrence from the Leadership Trust (pictured above) asked attendees how they had coped during the current business environment, and questioned what delegates had learned about themselves during the recession. He ended by asking: What do you need to know about your people to enable you to develop your business? u The final workshop offered the most enticing question: how do you fancy taking money off HMRC? Brian Williamson from Jumpstart works with clients to » » »
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On turning round a business: Talk to your customers. When I took over at ADL I spent the first six months meeting our key customers and finding out what they thought of us. It wasn’t pleasant... but it was crucial to finding out where we were Colin Robertson, Alexander Dennis Ltd (left)
On the future of airlines and air travel: “I can see the airline industry contracting by 25%-30% in the next five years. European airlines will consolidate; there are a few mergers in the pipeline and some national carriers are very vulnerable.”
recoup funds from HMRC for development work in sectors such as engineering, software development and the food and drink industry. He was followed by Stephen Robertson from Metis Partners, who highlighted the “non-balance sheet” assets most companies have but do not take advantage of. Stephen explained how to value these assets – and even how to borrow money using them as security.
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Willie Walsh
Working it out: top left, clockwise: Gary Townley from the Intellectual Property Office; Stephen Robertson from Metis Partners; and delegates work out their own answers with Glasgow School of Art
IoD Scotland Winter 2012 | 13
Conference report 2012 Afternoon session:
Financing the economy
We’re open for business: financiers promise that the cash is there for growth
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uture economic growth in Scotland would be dependent on business having access to the finance it needed – and in a session chaired by IoD Edinburgh’s Laura Gordon, two speakers from that sector told conference that barriers which had previously prevented access were finally being lowered. Gavin Gemmell, chairman of one of the world’s oldest networks of business angels, Archangel Informal Investment, highlighted the key role this kind of finance could have. Archangel had over 100 high-value investors on its books, and between them they had invested over £74m. Many of these investments had been backed by other funds from Scottish Enterprise, and had delivered real growth for dozens of companies. Archangel only invests in Scottish businesses, with many operating in the life sciences and other hi-tech sectors. One of its highest profile successes had been Optos plc. Its investment strategy was successful though not immune from failure: since launch it had seeded 79 companies, of which 39 had failed, with investors losing around £9m in total. However, over £34m had been returned to investors and £31m was still active. Archangel’s investment were patient and happy to work with businesses for a short-to-medium term. Long-term investments were better placed with banks but angels could offer more than just cash: investments were backed by the presence of experienced businesspeople joining companies’ boards, offering experience and expertise that could help deliver results. On average, angels invested around £1m for 4.8 years. Archangel had a growing portfolio of businesses on its books and it viewed its contribution to the economy as ‘making the future’ – providing smart money to good businesses. Gavin ended by highlighting the scale of business angels in the UK. Surprisingly, when compared to the United States in relative terms, business angels had a far greater role in the UK, while across Europe the concept was barely understood.
Ken Barclay, Head of Corporate Banking Division Scotland, RBS, offered a more traditional route to
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We lost the public’s trust... we put the short-term interest of bankers before that of the public...” Ken Barclay
finance for business. He began, however, by admitting his bank, with others, deserved much of the abuse it had received over recent years. However, he believed the bank’s worst days were long behind it: it had paid back much of the liquidity support to the Bank of England, its creditworthiness had approved and it had recorded an operating profit of £1 billion. Over £62 billion had been lent to business in the last quarter. Strong headwinds continued, unfortunately. The weakness of the American economy was a concern – the threat of the fiscal shelf that the country was going to fall over in 2013 was alarming. The Eurozone too was a threat to economic growth in the UK. To protect the bank in the future, RBS had reduced the size of its operations, and today it lent roughly the same amount that it brought in from savers. It was also
From the floor during Brian Taylor’s Big Debate: Hotels and tourism are vital to the Scottish economy – the sector employs more people than any other. We are competing in a global marketplace and air passenger duty is making Scotland uncompetitive and less attractive to tourists... Nicola Taylor, IoD Conference delegate
working hard to re-engage with its clients and re-establish trust. Ken accepted that the heart of RBS’s problems was a fundamental failure to put the customer first, and it had placed bankers’ short-term interests ahead of those of clients. This was wrong. To highlight the comparative strength of the bank today, Ken said its business relationship managers now approved 90 per cent of all loans and requests for overdrafts. Loan pricing for SMEs was on average less than five per cent and there were no fees on new loans for SMEs. RBS had supported 11,000 start-up businesses in Scotland in 2011, all backed by a specialist team to help companies who got into trouble. This team had a great deal of expertise to bring to bear on struggling businesses, though the process was tough and prospective business leaders could expect a challenging time, particularly if business plans had not been thoroughly researched. Conference delegates were interested in questioning both speakers further. On the subject of business confidence, Ken was keen to stress the damage that could be done by talking down the economy. The UK was in a vicious circle and he saw the
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Conference adds its own views to Brian Taylor’s ‘Big Debate’
RBS as having a responsibility to help break this. Gavin Gemmell was asked what parameters were placed on the type of investments made. Archangels didn’t invest in certain areas – property, retail, hotels, as examples, as it wanted to back businesses that weren’t cemented in one physical place. Angels looked for a growth plan that would deliver a £1m gross profit at some point in the medium future. On the subject of governance, one delegate asked whether the lack of strict regulations made business angel investments lax. Gavin pointed out that that was unlikely as investors tended to join the board of the businesses they were helping to finance, and that delivered a strong element of control. “Our investments always include a nonexecutive director joining the company board. We actually bring in higher levels of governance – it is Archangel that constantly badgers the companies it backs for quarterly management reports.” By way of contrast, Gavin had nothing but scorn for the way some other finance sectors were governed, particularly hedge funds, which he described as run by “uncommunicative and highly overpaid stockmarket punters”. None of his own portfolio was invested in hedge funds.
Conference charity A prize raffle at the IoD Scotland Conference raised £1,640, which will be divided between the Children’s Hospice Association Scotland and Roma Dellal, a young girl who is currently battling cancer and needs specialist treatment overseas. Thanks for your generosity.
After its successful introduction to the Conference last year, BBC Radio Scotland’s Brian Taylor’s Big Debate was broadcast from Cameron House during the day and was a welcome addition to the programme. A high-powered panel of business leaders and politicians, including IoD Scotland’s David Watt and conference speaker Willie Walsh, engaged in a lively debate based around a series of provocative questions on the big issues of the day, as put to them by conference delegates. Topics included Stonewall’s award of the ‘Bigot of the Year’ to Cardinal Keith O’Brien, the impact of air passenger duty on Scotland’s economy, Alex Salmond’s confusion over Scotland’s position in the EU if the independence referendum is carried and the American presidential elections. The result was a lively and well-informed debate from the panel and the audience, all efficiently marshalled by the ever-professional Brian Taylor. Pictured above on the radio panel are (from left) Stuart Millen, SNP; Atholl Duncan, executive director of ICAS; BBC Scotland’s political editor Brian Taylor; Willie Walsh, chief executive, International Airlines Group; Ken Macintosh, Labour; and David Watt, IoD Scotland executive director.
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Conference report 2012 Afternoon session:
Entrepreneurs and leadership can turn around the economy
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os Taylor, managing director of the Ros Taylor Group, opened an energetic and enthusiastic midafternoon session by asking how leadership and entrepreneurship could turn round an organisation – and the economy. Leadership has a big influence on overall performance – “good or bad leadership can affect a company’s profits by as much as 15 per cent in either direction”, said Ros – and one bad leader can have such a profoundly negative impact on a company that it is irreparably damaged. Ros listed the 10 commandments of good leadership, which placed problem-solving as the number one skill according to business leaders themselves – though encouraging creative thinking and decision-making didn’t feature. Yet encouraging bold decision making was vital, she said. Too often, businesses are hampered in their search for the next big idea by a bad decision in the past – “our mistakes of the past hold us back and stifle creativity”. To Ros, creativity comes through happiness and “the power of small wins”. Leaders must give good feedback to employees but her own research on the issue had found that too many directors didn’t understand its importance. Young people in the office tended to feel overlooked, Ros said, which was a major error, as today’s ‘Generation Y’ were often far more creative than their bosses. As a whole, Scotland wasn’t harnessing the talents of its young people well enough, an example of how business was missing the importance creative thinking. For too many organisations, ‘creative thinking’ was earmarked for an away-day. As Ros put it, the idea is laughable … “so we’re going to think creatively about the work we do for just one day a year...?”
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ne group that never overlooks the importance of young people or downplays their creativity is the Prince’s Trust Youth Business Scotland (PTYBS). The PTYBS supports hundreds of fledgling businesses throughout Scotland, and three people who had benefitted from that backing were on hand to outline the key role the charity had played in their success. While no longer considered ‘young’ – particularly as he’d become a grandfather on the morning of conference – Billy Smilie’s Border Embroideries Ltd had grown from humble beginnings into a multi-million pound affair employing over 50 full-time members of staff,
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Inspiration: Ros Taylor with PTYBS speakers Sam Zawadzki, Jen Munro and Billy Smilie with many temporary employees added on to the payroll to handle peak periods. The business took off after Billy was supported by PTYBS in 1989, when a loan allowed him to purchase his first embroidery machine to fulfill orders selling uniforms and sports kit to schools and clubs. However, it wasn’t just the cash that Billy was grateful for: the advice he’d received and ongoing support from PTYBS mentors had been even more valuable. Today, Billy is repaying that help by offering his services to PTYBS as a mentor. His comments were echoed by Sam Zawadzki, who in just three months had turned his online landlords’ property management website Advance to Go into a real industry leader. Sam’s initial request for PTYBS help had been turned down but he learned a huge amount from this rejection. He fine-tuned his business plan and refocused his strategy, ultimately convincing the charity that his ideas were worth backing. “The £5,000 loaned to me by the Trust was very useful... but the advice the panel gave me
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made more of a difference.” Today his website is garnering high-profile support, with Sir Richard Branson saying it was “fun, creative and a challenge to the lettings industry.” The final speaker was Jen Munro, who runs the International Summer School of Scotland. Jen was an enthusiastic advocate for both the PTYBS and her own job, which involves organising educational summer schools for students from around the world at St Andrew’s and Cambridge universities. The PTYBS had been an “unbiased judge of my business” and had offered her vital support, particularly in marketing her ideas to a global audience. All three speakers offered their own insights into the challenges and delights of running your own business. For Sam, the knowledge that he had just taken on his first member of staff – “a graduate with real skills now putting them to good use” had been a major success, while Jen had developed her business in a way that ensured her staff saw their jobs as fun – “I’m just encouraging my people to enjoy what they do and be good at it.”
Young people are overlooked – that’s a major error, as today’s ‘Generation Y’ are often far more creative than their bosses. As a whole, Scotland isn’t harnessing the creative talents of its young people ... let’s not keep ‘creative thinking’ for away-days only...”
Ros Taylor
Alan Lawson
Simon Walker
Afternoon session:
Key steps for the future
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ooking forward – with confidence – was the goal of conference’s final session, chaired by IoD Fife’s Stephen Westwood. He was joined on the stage by the president of the Scottish Rugby Union, Alan Lawson, and Simon Walker, the director-general of the IoD. Alan urged delegates to constantly seek to push the boundaries of how their businesses operated. He said: “Don’t stand still: remember, stumbling might not seem great progress but it takes motion to stumble, which is preferable to inertia. “You don’t need to go forward in leaps and bounds. Look for marginal gains – a one per cent improvement every day delivers massive benefits. But keep going forward.” On the rugby pitch, a united team was vital, and that culture was needed in the workplace too. Everyone working together was the key: “Egos are a stumbling block to progress.” He called for a new culture of ambition. “Too often we see ‘all right’ as good enough; sub-optimal performance is tolerated. We have to change this mindset.” The key for Alan was to eliminate fear of failure, and to stop analysing our failures too much. There was a contradiction in the way we raked over ideas that fail but don’t do the same when we win: “We need to celebrate success,” he said. Two quotes from giants of the rugby world made their own telling contributions. Sir Clive Woodward had always told people to ‘avoid energy sappers’, while South Africa’s former captain Francois Pienaar had once remarked: “Leaders use failures to grow.” What marks out great business leaders, Alan said, was their selflessness and have bottle. “They make tough decisions and are prepared to set clear targets – and know when the bar isn’t set high enough”. Finally: “Take responsibility for your actions.”
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imon Walker, IoD director-general, closed conference by outlining the current state of the economy and calling for tougher Government action to cut state spending and reduce red tape and bureaucracy. He recognised the harsh climate in which many IoD members are continuing to trade. “The economy is flatlining and the current state of the economy is no-one’s idea of a good starting point. But IoD members know that already: you’re face-to-face with the real economic picture.” Simon had taken that picture to No 10 Downing Street recently, on behalf of members. “We met with the David Cameron and told him the messages we’d received from members through Policy Voice.” He encouraged other members to register with this initiative. “The more members who talk to us through Policy Voice, the more we get a crystal clear picture on the state of the economy. We will take that message to Government on your behalf.” It was clear to Simon that the Government needed to do more to help business. On reducing regulations, “the bonfire of red tape we were promised just hasn’t happened.” More worryingly, “regulations are making employers cautious about taking new workers on.” On taxation, Simon allied himself closely with the comments by Willie Walsh on air passenger duty. “Even in this digital age, we need face-to-face contact and there’s clear evidence that APD is
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Simon Walker on talking to Government: “The IoD’s Policy Voice needs your examples of poor practice to pass on to Government. We need to hear examples of red tape stifling growth, of bureaucracy tieing businesses in knots, of the difficulties in securing public sector contracts...” making the UK uncompetitive. It’s not even deductible as a business expense!” The tax and NI system were both flawed, delivering real overall tax rates at over 40 per cent for workers earning between £8-42,000, and at 66% for those earning between £100,000 and £140,000. “It’s too complicated and too onerous.” The Government also needed to improve the UK’s infrastructure, and Simon called for action now: “Stop dithering; be decisive. Government needs to get a grip on plans to expand airport capacity, develop HS2 and boost broadband roll-out, particularly in rural areas.” If SMEs were to be the future of the UK economy as Government claimed, official procurement practices needed to change. “It is too bureaucratic to bid for public sector contracts and red tape demands are too much for small businesses.” Access to finance was clearly still an issue, though the position was improving slightly. “There are still too many barriers to finance. Banks are making unreasonable demands for guarantees and charges before finance is agreed”. Finally, confidence was key. We need evidence of the infamous ‘green shoots’, Simon said, though there are a few positive messages coming through. One of those was the IoD’s growth in Scotland. Membership was up, said Simon, a testimony to the hard work of David Watt and his team. The excellent turnout at conference was another sign of returning confidence, while the excellent corporate deals IoD Scotland had signed with ScotRail and other major companies were a signal of the esteem with which the IoD was viewed by the wider business community.
IoD Scotland Winter 2012 | 17
IoD membership
Future events
To book on any event, see www.iodscotland.com or call 0131 557 5488
Replacing the Forth: A breakfast update Date: Tuesday, 22 January Please note this is a rearranged date Time: 8am - 9.30am Venue: Brook Queensferry Hotel, St Margaret’s Head, North Queensferry, KY11 1HP Cost: Members £20 + VAT; Non Members £25 + VAT Join IoD Scotland and Lawrence Shackman, Transport Scotland’s Project Manager for The Forth Replacement Crossing, for an update on the progress of the new Forth Crossing. Lawrence was appointed to this post in January 2008, having spent 18 months as project manager for the Forth Replacement Crossing Study, the extensive appraisal of options for the crossing which provided the evidence for the Scottish Government’s decision to build the £1.45 – £1.6 billion cable-stay bridge. The Forth Replacement Crossing (FRC) is a major infrastructure project for Scotland, designed to safeguard a vital connection in the country’s transport network.
Despite significant investment and maintenance over its lifetime, the current Forth Road Bridge is showing signs of deterioration and is not suitable as the longterm main crossing of the Firth of Forth. The FRC is designed to safeguard this vital cross-Forth connection in Scotland’s transport network. Construction commenced in Autumn 2011 following the completion of a two-year procurement process that has delivered significant savings on the scheme’s previous expected cost. All three main contracts that make up the FRC project have now been awarded, with all three successful bids coming in under budget. The principal contract to build the new bridge and connecting roads was awarded to the Forth Crossing Bridge Constructors (FCBC) consortium.
At the planning stage: An update of the Forth replacement project can be found at: www. transportscotland.gov.uk/ files/documents/projects/ forth-replacement/ REV_LOW_RES_FCBC_ Update_August12_.pdf
Aberdeen
Women into business: Getting the most out of your money
Book your place at www.iodscotland.com
Sponsored by St James Place Partnership Date: Tuesday, 27 November Time: 12 noon - 2.30pm Venue: St James Place Partnership, St. James’s House, 3 Queens Gate, Aberdeen, AB15 5YL Cost: Members - £10 + VAT; Non Members - £10 + VAT IoD Scotland and St James’s Place Wealth Management are partners in this exciting new initiative for Scottish women. In these difficult economic conditions it pays to spend some time on your personal finances, and with current world economic issues at the forefront of most news bulletins, it has never been more relevant to address or review your financial situation. New pension legislation, the effects of quantitative easing, tax planning, investment options, asset allocation, risk management, what’s happening in the markets – you can’t
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afford not to know. Lots of us are too busy juggling our working and family lives or have left the management of our money to banks or another person. Isn’t it time we all reviewed our personal finances with the rigour we give to getting value from utilities, insurances and other areas? Sign up now for an extremely enjoyable and informative ‘Women only” event in an informal setting over a glass of wine, with guest speakers Alexandra Webster, an expert in taxation, and Dan Looney from St James’s Place Asset Management who together will change the way you look at your future finances. “I’m a classic case. Careful about running my business, but too busy to think about my
own finances, I had all my savings invested with a bank scheme. “I was lucky to be referred to Angus, with all the resource of SJP behind him, and now have a better income in retirement than I could have hoped for as things stood. The bank just wasn’t interested.” Agnes Porter, Former CEO
Guerrilla tactics for breakthrough results – an evening with Phil Olley Sponsored by Barclays Wealth
He delivers a high-value message, and his keynote presentations, masterclasses and seminars should come with a warning! People say the impact of seeing and hearing Phil speak can be life-changing. Surviving a near-death experience has added that extra depth, passion and insight into his ‘Phil-osophy’ and Phil’s challenging, humorous and creative style produces a highly practical toolkit of immediately useable ideas and techniques to help business people achieve outstanding results. Phil has written articles and columns
Date: Tuesday, 27 November Time: 6.00pm - 8.00pm Venue: Barclays,‘Aurora’, 120 Bothwell St, Glasgow,G2 7JT Cost: Members £15 + vat Non Members £25 + vat Phil Olley is on a mission to help individuals, teams and businesses around the world discover the art, science and skill of FOCUSing, to raise the bar on performance, increase productivity, and achieve their goals.
A merry Christmas
IoD is influencing the debate
IoD Glasgow & West of Scotland Annual Christmas Reception, sponsored by Investec Wealth Management
Date: Time: Venue: Cost:
Wednesday, 12 December 6pm - 8pm Blythswood Hotel, 11 Blythswood Square, Glasgow, G2 4AD Members £25 + VAT; Non Members £35 + VAT
The IoD would like to invite you and your colleagues to attend our Annual Christmas Reception, sponsored by Investec Wealth Management, specialist providers of active investment products and services. This very special annual networking event is being held at the award-winning Blythswood Hotel, Glasgow’s most glamorous venue. Located in one of the city’s most famous and historical buildings, the Blythswood has been transformed into a luxurious five-star hotel and has become the home of the IoD in Glasgow and the West of Scotland since it opened its doors back in 2009. There will be a sparkling drinks and canapés reception, so please come along and join us for the very best Christmas hospitality. During the evening we will be raising funds for CLIC Sargent, so you and your guests will have the opportunity to win some fabulous prizes! A warm welcome is extended to members and non-members. The cost per person is £25 + vat for members and £35 + vat for non-members. Book at www.iodscotland.com
for business magazines, and is currently a regular contributor to The Market magazine, and he regularly features on BBC radio and contributes to national press articles and prime-time TV programmes, including a number of appearances on the Richard & Judy show. His first book, Counting Chickens has already ‘gone international’ and a second edition is being specially produced for an Asian audience. His second, RESULT! Think Fast, Take Action, Get Results was published by Pearson on 1 November.
About Investec Wealth & Investment: We offer wealth preservation and enhancement with out-of-the-ordinary levels of personal service. Our business has a history of investment management that stretches back to 1827. We offer wealth management and investment services that are entirely built around your needs. Whether you are a private individual, charity, friendly society, trust, or a professional advising these clients, we remain completely focused on understanding your goals and helping you reach them. What sets us apart is our people. The enduring relationships we form with our clients are built on trust. Coupled with our forward-thinking investment process, we believe that our service is second to none. We believe great relationships start with a conversation, so why not give us a call? Please visit our website, call Laura Lambie on 0771 772 7311 or email laura.lambie@ investecwin.co.uk Please note that the value of investments and the income derived from them may fluctuate and investors may not receive back the amount originally invested. www.investecwin.co.uk
Date: Time: Venue: Cost:
Thursday, 21 February 6pm - 9pm Central Glasgow TBC
IoD Glasgow is planning a special Influencers’ Dinner where members will have a chance to meet informally one of the keynote speakers of the recent IoD Scotland Conference, Colin Robertson, CEO of Alexander Dennis Ltd. We are still looking to confirm the venue but it will be a central Glasgow location. Numbers at our Influencers’ Dinners are strictly limited, allowing each guest to network closely with some of Scotland’s biggest business names or political leaders. If you are interested in attending this event, we would encourage you to reserve your place now through www.iodscotland.com.
Donough rises to the challenge The IoD Scotland’s Annual Golf Challenge saw a group of 20 members and friends enjoy a lovely day on the fantastic Dundonald links between Irvine and Troon in Ayrside in September. The afternoon produced two worthy winners: • Scratch – Donough O’Brien of Munro Consulting • Handicap – Nick Price of Bright Purple Resourcing Limited The main prizes were golfing prints donated by David Evans. The players also had a raffle for the Prince and Princess of Wales Hospice in Glasgow and raised £150.
IoD Scotland Winter 2012 | 19
Women in business
Take a positive approach to gender equality Eilidh Wiseman and Val Dougan ask whether we need to take a more active role to ensure Scotland’s boardrooms have a better gender balance
Earlier this year the Business Secretary, Vince Cable, called on companies to “step up their game” on boardroom diversity. And while we have seen significant improvements in this area since the publication, in February 2011, of the Davies Report on Women in Boards, regrettably there is still a need to convince many companies of the merits of taking action in this area. Hopefully the latest announcement from the Government that from October 2013, quoted companies will be required to report on the number of women working in their company, including managerial and board level appointments, will galvanise the remaining sceptics into action. So why is there still a reluctance to take action? For a variety of reasons many organisations and individuals remain uncomfortable about taking what they see as “women-only measures”. Often it is senior women themselves who are the strongest
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opponents of such initiatives. “I’ve made it here under my own steam, so others can too” is a common position. But the reality with this laissez-faire approach, where only a handful of high-achieving women make it, means that companies are losing talented employees for reasons related to their gender. In terms of projecting the consequences of doing nothing, the Equality and Human Rights Commission (EHRC) has said that if no action is taken it will be another 70 years before the UK achieves gender-balanced boardrooms. Perhaps it comes down to simply saying that achieving equality is not about treating everyone equally. There are still some very old-fashioned views out there, that equality means being blind to difference. In fact the opposite is true. For many working women who have to juggle the demands of a young family and work, and have had to take time out, research has shown that they
boardroom diversity, they should appreciate that women-only measures are a form of positive action designed to tackle under-representation which should not have a detrimental impact on men, since the system retains merit rather than gender as the defining factor. There is a huge difference between positive action and positive discrimination. Quite simply, positive action is lawful, positive discrimination is not. The former simply encourages an underrepresented group to help bring about equality, as opposed to positive discrimination where gender is used as the reason for appointing an individual.
suffer a “motherhood penalty”. Then, when it comes to moving up through the ranks, another term has been adopted: “the marzipan layer”. This is where successful women fail to move into senior roles because the demands of the role are incompatible with their domestic life. Positive discrimination? Another common blocker to progress can be the view that these types of initiatives are unfair to men, and involve some form of reverse discrimination. This seems to assume that diversity is at the expense of talent or commercial advantage. In fact evidence shows that diversity is good for business: that companies will lose out on talent if they do not find ways of promoting and retaining women whom they spend years developing to unlock their full potential. For those companies who remain unconvinced of the need to take positive measures to improve
Some practical steps For those who are concerned about the resourcing and potential cost implications of diversity initiatives, there is good news. The fact that there are currently no hard and fast rules regarding the approach means each organisation can drive what works for them and suits their budget. Many of the solutions are simple. In terms of getting started on this route there are a number of practical steps organisations can take which consider both the supply and demand challenges of appointing women to senior roles. First of all, start by reviewing your board appointment process – are positions gained through word of mouth or advertised, internally or externally? Widening your recruitment pool and process will assist with greater diversity of talent. What skills are you looking for in a board member? Most companies want leaders and decision makers who are prepared to question and analyse. Studies have shown that having women on boards reduces “group think” and leads to more effective decision making. Consider what your pool of female senior managers looks like. The pipeline below the board level positions is critical to the success of the process. Women need to be appointed on merit, but you may need to focus your resources on widening your pool for selection. Identify whether you need to introduce mentoring schemes to encourage more female senior managers to not only have the skills to be a board member, but also have the desire to be one. Actively encourage female senior managers to apply for positions. It is lawful to encourage female applicants to apply in job advertisements provided there is evidence of under-representation. In the last year alone, there have been three separate consultation exercises regarding female quotas for board members. The pressure from Europe to move in this direction is mounting. In our view it is surely inevitable that binding quotas will be introduced in the future. We hope, however, that sufficient time and grace will be provided to permit those companies who wish to meet their targets on a voluntary basis. For this reason companies should act now, when they can control their approach to increasing senior female appointments rather than having the terms dictated to them. • Eilidh Wiseman is a Partner and Head of Employment and Val Dougan is a Professional Support Lawyer at UK law firm Dundas & Wilson CS LLP.
“In terms of doing nothing, the Equality and Human Rights Commission has said that if no action is taken it will be another 70 years before the UK achieves gender-balanced boardrooms...”
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Education and qualifications
New qualifications will add excellence to Scotland’s education The Scottish Qualifications Authority is introducing new qualifications that will help young people develop the skills to meet the needs of today’s employers
When can I expect to see young people with the new qualifications?
Curriculum for Excellence is the new approach to learning in schools and colleges which will develop young people’s skills for the 21st century. The Scottish Qualifications Authority (SQA) has developed new National Qualifications to support the Curriculum for Excellence. Isabel Miller, one of SQA’s Curriculum for Excellence Liaison Managers, works directly with employers, training providers and other stakeholders to help them understand the changes to the Scotland’s qualifications system and what the new qualifications will mean for employers. Isabel explains: “The new National Qualifications, which will be available in schools and colleges across Scotland in a year’s time, will help young people reach their full potential as they progress from their broad, general education through to college, university, other learning, training and employment. It is our job to ensure employers understand the new qualifications and how they differ from the current system.”
Explaining when employers would first encounter young people with the new qualifications, Isabel said: “The new qualifications will be introduced from August 2013 onwards. The first young people to leave school with the new National 1, National 2, National 3, National 4 and/or National 5 will do so in June 2014. Many young people will continue to study at school or college after they turn 16 and some may go on to study for the new Higher and Advanced Higher. The first of these young people will leave school or college in June 2015 and June 2016 respectively. “It’s worth remembering that some schools and local authorities may implement the delivery of the new qualifications in different ways, so these timescales could vary across the country.”
How will the new qualifications be graded?
Why are qualifications changing?
Curriculum for Excellence has brought a new way of learning into schools and colleges, equipping young people with the skills, knowledge and understanding they need to succeed in the 21st century. The skills young people learn today will help them to succeed in life outside the classroom. Isabel said: “Our new qualifications will help young people demonstrate the knowledge and skills they have acquired at school or college and help them adapt to further learning, training and employment.”
Which qualifications are changing?
The table (right) details the new National Qualifications and the current qualifications they will replace.
SCQF level Current National Qualifications
The new Courses at National 2 through to National 4 will not be graded. They will be assessed as pass or fail by teachers and lecturers in schools and colleges. Courses at National 5, Higher and Advanced Higher level will be marked externally by SQA and graded A to D or ‘No Award’.
New Awards
Speaking about SQA’s new Awards, Isabel said: “Some employers may have already heard about our new » » » Replaced by
New National Qualifications
1 and 2
Access 1 and Access 2
National 1 and National 2
3
Access 3 Standard Grade (Foundation Level)
National 3
4
Standard Grade (General Level) Intermediate 1
National 4
5
Standard Grade (Credit Level) Intermediate 2
National 5
6
Higher
Higher (new)
7
Advanced Higher
Advanced Higher (new)
22 | IoD Scotland Winter 2012
Angels fly on the wings of change Awards. These have been developed alongside the new National Qualifications and do not replace any existing qualifications. Their job is to give young people more ways to demonstrate their achievement at school and college. “Some of our new Awards cover work from across different subjects areas. They are shorter than our traditional courses, and recognise success across different levels of difficulty, meaning they’re suitable for young people of all abilities.” The new Awards, which have been available in schools and colleges since August 2012, are marked and assessed by teachers and lecturers and do not have any external assessment or exams. SQA will check the quality of these assessments to make sure they meet national standards.
Other types of National Qualifications As well as the new qualifications, SQA is continuing to offer other types of National Qualifications that support learners’ Wider Achievement. These include Skills for Work Courses, which encourage learners to become familiar with the world of work, and National Progression Awards and National Certificates, which assess skills, knowledge and understanding in specialist vocational areas and prepare young people for employment, career development or progression to further study at HNC/HND level.
Where can I find more information? Our website, www.sqa.org.uk/cfeforemployers, is full of useful information to help employers understand the changes to the new National Qualifications, including how they have been developed and how we are working with schools and colleges to introduce them. You can also keep in touch with us on Facebook at www.facebook.com/ScottishQualifications Authority, follow our updates on Twitter at @ sqanews or subscribe to our YouTube channel, www. youtube.com/user/SQAonline. In addition, our Employer Liaison Manager, Isabel Millar, is available to answer any questions you may have about the new National Qualifications and can be contacted at isabel. millar@sqa.org.uk or on 07825 689 222. Here to help you make the most of the new qualifications – SQA’s Employer Liaison Manager Isabel Miller
Gareth Magee MIoD, Partner, Scott Moncrieff, offers a personal opinion on a change to the way business angels operate in Scotland Seasonal change is in the air – autumn stole an abrupt march on the summer-that-never-was and sadly, we must now equip ourselves with hats, brollies and macs to face the winter gales. So too, I have seen a stark shift in the sphere of Scotland’s business angels. Where once they were resolute, I now sense a fundamentally different stance. Five years ago I attended an event in Charlotte Square, to hear one of Scotland’s most prominent business angels address the issue of “how in the current climate, does one successfully attract an angel’s interest?” He promised an attentive audience five top tips on how to stand out from the crowd of the thousands of hopeful, investmenthungry businesses. His tips were great, and to be honest, I’ve been putting them into practice ever since. His sixth, bonus tip was delivered as a severe warning: “Never talk about exits”. The point was that plans for exit were irrelevant at the point of investment; rather, the fundamentals of the business had to be in place: a good product; a clear market; a screaming customer need and a strong management team. With these in place, and adequate angel investment to fund growth, the exit, he argued, would take care of itself, whether it be a management buy out, a trade sale, or some form of public offer. Making hollow references to these theoretical possibilities, as many business plans tended to do, only served as an irritant to the angels. So what has changed? If I were attending the same event now, I am in no doubt at all that his sixth point would be: “Most certainly do talk about exits!”
All of a sudden, exits are essential. For any angel pitch to be successful, businesses now need to address how the promoters and angels will achieve a successful exit to secure a financial return. This is not simply a whim. Angel investment in Scotland is maturing. Our most prominent syndicates have now been active for almost 20 years. We have an angel network, structure and coinvestment model that is the envy of other jurisdictions. Other nations are seeking to replicate the model that we have. While the angels have achieved outstanding success and have been instrumental in lobbying for, and creating, this model structure, what they now need are more successful exits in sufficient volume to validate the model that has been created and to replenish the syndicate pots to fund future investment and growth. This is even more critical in the current climate, where angels are often the only show in town. Exits are now top of the angel agenda. These winds of change have reached American shores too. Recently I heard John Huston, of Ohio Techangels, and Chair of North America’s Angel Capital Association, take the message a step further. Identifying your first customer has always been a fundamental requirement for attracting angel investment. Huston points out, however, that successful US pitches now not only identify their first customer but have an eye to the exit. They are identifying the most likely buyers for their businesses. Might they be customers or suppliers? These are the people with whom to forge relationships right from the start. For the many businesses seeking angel investment, an awareness of this sea-change is essential intelligence. And as for the other top tips – they remain, and still hold true.
IoD Scotland Winter 2012 | 23
Business advice
Leadership debates seems to miss out ‘sales’ element by Bruce Hamilton
T
he debate in Scotland about leadership in business has been raging for some considerable time. However I am always intrigued and, indeed, dismayed, that the terms sales leadership, sales performance management or sales awareness are rarely mentioned, if at all, in this context. Surely strong commercial leadership requires at least a competent level of sales awareness and is critical to the success of most business leaders? Sales is and always will be the lifeblood of most organisations and a sustainable revenue stream is essential. But how many times do we hear, “Great idea, great product, great design, fabulous potential but can’t sell”. Maybe it should it really be “don’t know how to sell!”. Selling is a business discipline which is often misunderstood, feared or simply just expected to happen, so it is little wonder that some would-be entrepreneurs or ill-equipped sales people do not produce the results. No matter how wonderful the product or innovation is perceived to be, it still has to be sold! When it comes to professional selling it’s almost like an Achilles heel to us in Scotland. Why should this be? Is it a lack of understanding, a lack of knowledge or a lack of investment in the correct tools, techniques and processes? I believe it is the third issue, lack of investment, and in many cases this is caused by ‘non-sales’ senior management’s lack of knowledge and understanding. So is selling an art or a science? Well, from my years of experience working with multinationals and SMEs across a wide variety of sectors, I have absolutely no doubt that selling
“Sales is and always will be the lifeblood of most organisations and a sustainable revenue stream is essential...” 24 | IoD Scotland Winter 2012
is 80 per cent science and 20 per cent art and like every other discipline, should be based on a structured and focused process, rather than simply leaving it to chance. Why is it that when it comes to developing a structured approach to sales performance management, organisations don’t employ the same vigour and enthusiasm as they do when implementing Lean Manufacturing, Six Sigma or ISO certification? Sales performance management is and always has been a major challenge for business owners, directors and senior management, particularly in the present economic climate. All too often, lack of understanding of the sales process results in short-term panic tactics rather than adopting a longer-term strategy to sales and having the conviction to allow the process to evolve and mature. Selling is not a black art and needs to be treated like all other business disciplines where the correct processes and practices are put into place. Selling is not easy but if approached in a structured and professional manner it will give any organisation a true competitive edge. The sales process does not have to be complicated but it must be managed, monitored and measured effectively to ensure success. And by focusing on the process rather than the outcome, the results will follow. So how do owners, directors and senior management without much sales experience ensure they make a constructive input to sales leadership? The basic building block should always be a working knowledge of the sales methodology or sales process used by the sales team. An understanding of the system or
systems which measure and monitor sales performance, what sales intelligence this generates and how sales opportunities are tracked is also crucial. Establish if the sales team has sales plans in place and if these are regularly reviewed. How accurate is forecasting, how are individual performances benchmarked and are there any skill deficiencies which need to be addressed? By understanding the significance of all these elements, you will be better able to appreciate what drives sales performance and make informed strategic decisions with confidence. All too often, when management only focuses on the headline sales figures and the results start to falter, the quick fix is to send the team on a sales training course. Yes, training does have a role to play but is not necessarily the total panacea. It may produce some short-term results but training should only be part of a much more comprehensive approach to sales performance management. In any discipline, knowledge, understanding, a robust process and consistency of approach help build the appropriate skill sets and improve confidence. Success will then be achieved. Selling is no different. Creating an effective and successful sales culture needs company owners, directors and senior management to take greater ownership of what contributes to the health of their organisation’s sales performance. This can only be achieved if we empathise with the sales team’s challenges and appreciate how the sales process actually works and is measured. True support and productive involvement must be based on knowledge and understanding, not perception or anecdotal evidence. And one final thought to consider. In today’s market and with today’s pressures, it is all too easy to hide behind digital communication and social media and think we are being effective in our sales process. In higher value sales the importance of face-to-face relationships has never been greater. People buy from people and in particular from people who practice the science of selling. Yes, selling is a science and the more we accept this and treat it as a business discipline rather than a black art, the far greater chance we have of energising the sales process and fulfilling the role of successful sales leaders. Bruce Hamilton is managing director of SalesMap Limited and can be contacted on 07595 746 622 or by email at bruce@salesmap.co.uk
Looking for a way to bring harmony back to the workplace or into a contract dispute? John Sturrock QC suggests the business world would do well to make greater use of mediation to build a more collaborative culture – and to solve polarised disputes
“We are used to thinking about competitions in which there is only one winner... But the world is rarely like that... The key to doing well lies not in overcoming others but in eliciting their co-operation...” Thus wrote the author Robert Axelrod in The Evolution of Cooperation. And yet, “...conflict is a growth industry. Although negotiation takes place every day, it is not easy to do well. Standard strategies for negotiation often leave people dissatisfied, worn out or alienated... ” These words from Harvard Professor Roger Fisher, in the seminal work, Getting to Yes, resonate with many of us. Skills to negotiate and manage conflict effectively and to work collaboratively are central to success in today’s world, whether within an organisation, with contractors, with partners or others in a tough deal or difficult dispute – and for individuals in leadership and other important positions. However, as a mediator who has worked with businesses and individuals in hundreds of disputes and conflicts, the refrain I hear most is: “I wish we had had this conversation a year ago...” Coupled with “Why have we spent so much time and money on this and yet not progressed far...?”, these remarks express the frustration felt by many in business about costly polarising disputes and unresolved underlying issues which can affect people, productivity and profit so adversely. Often, the default position when difficulties arise is to resort to internal disciplinary procedures, tribunals, arbitrations and court actions. Or to allow disputes to fester and escalate until they are no longer manageable. However, the cost not only in time and money but in loss of reputation, damaged business relationships, opportunities foregone, reduced turnover and poor morale is no longer acceptable to most businesses. This is magnified in times of economic constraints and general commercial uncertainty. Many organisations, SMEs and large corporates are moving towards collaborative approaches in their supply chains, subcontracts, customer relations, major projects, joint ventures and workplace relations. This is reflected in better risk management strategies, enhanced negotiation skills and interest-based problem-solving. Sometimes, however, matters become sufficiently difficult that an independent third
Take a moment or two to talk party can add real value. Whether the matter has gone to litigation or is simply stuck in deadlock (or a new deal or project is proving difficult to conclude or manage), this independent third party, the mediator, assists those affected to work out a solution which, on their own, they have been unable to do. The success rate for mediation across the globe is remarkable. With a highly skilled and well-trained mediator, disputes which have dragged on for months or even years can be resolved in a short period, often just one day, with minimal lead-in time. Why is this so? They say that 80 per cent of business disputes result from a lack of, or poor, communication. We don’t listen or try to view things from the other perspective. In the absence of trust, we overlook that there are many sides to most stories. Human nature, after all, tends to make many of us wary and defensive in difficult situations. We stake out our positions. It is, even in hard-nosed commercial dealings, often about the people and our misperceptions. Or as one CEO said, after four hours of mediation, to a client with whom his firm had a serious dispute: “It’s a people business and we need to work together... I now understand the human side and the hurt you felt”. Mediation provides both a buffer and a bridge. In confidential meetings (all aspects of mediation are conducted in private), those involved can express frustration, anger, hopes, fears and concerns about the problem. They can explore their real underlying interests and needs in a way that is often impossible face-to-face on their own. What is really going on? It is often, as the social commentator Malcolm Muggeridge once observed, “not about what it is about”. The mediator, as buffer, can help to absorb
the emotional energy and turn it into something more productive. Then, as bridge, he or she can help to explore mutually beneficial options for moving forward, pros and cons, opportunities, choices, alternative courses of action, testing these out with the key players, separating the people from the problem. Often this will involve bringing together people who have not talked or who have difficulty in communicating. As one lead negotiator said to his opposite number with whom he had shared a Portakabin in a major construction project for many months, after three days of robust but productive negotiations with a mediator: “Just as important as the outcome is that we now understand where you guys are coming from”. The entrepreneur, Richard Farleigh, has observed: “Most business success is about building relationships.” Where these are fractured or fragile, in need of renewal or restoration, mediation provides a cost-effective and time-saving approach. When the uncertainty of a court of law beckons, or a managed ending to a business arrangement is necessary, mediation offers an opportunity to retain or regain control over decision-making in a dignified manner. Mediation’s benefits are summed up by one user: “Individual reputations and dignities were preserved and maintained throughout and following the day... the successful outcome derived from mediation produced a ‘win-win’ result, leaving everyone with a real sense of achievement and success.”
• The author of this article, John Sturrock QC, is a mediator and chief executive of Core Solutions Group IoD members can take advantage of a special rate for Core’s one-day Master Class on Negotiation and Conflict Management on 25 January 2013 – see www.core-solutions. com and call 0131 226 6564, quoting reference IoD.
IoD Scotland Winter 2012 | 25
Pensions reform
Auto enrolment – how hard can it be? The ‘big four’ signed up at the start of October... and there are many more businesses ready to follow them down the road to auto enrolment. Is your business ready to take your place in the workplace pensions reform, asks Mike Kennedy, partner at Barnett Waddingham LLP in Glasgow
After years of planning and a raft of surveys trying to predict its success, workplace pensions reform – or ‘auto enrolment’ – is finally here. On 1 October the four largest employers in the UK were required to automatically enrol their staff into a qualifying workplace pension scheme, and pay contributions for those members. These requirements will come into effect for businesses across the board over the next five years, starting with the largest employers. The principle of automatically enrolling employees into a pension scheme sounds fairly straightforward on the face of it, but the reality of the requirements can be quite different.
The third group are ‘entitled workers’, who aren’t actually entitled to much! This covers workers who earn less than £5,564 pa. They can choose to join an employer’s pension scheme but there is no requirement for the employer to pay contributions for them. Then comes the tricky bit of monitoring how employees move between groups. For example, weekly paid staff may move from non-eligible to eligible if their earnings in any week exceed the equivalent of £8,105 pa when annualised. In this case they would need to be automatically enrolled at that time even though it may be a temporary blip in earnings due to overtime. Having payroll systems that can cope with monitoring the movement of staff between these categories will be absolutely essential to complying with the requirements. Help is at hand, with many of the large insurance companies and a number of software providers offering systems that can feed into your payroll system to manage this. Of course, employees can always choose to opt out of the system once they have been enrolled. However, they will need to be automatically re-enrolled three years later so payroll systems need to be able to cope with this.
General requirements
Provide a suitable arrangement
All employers with more than five employees will need to pay pension contributions for their staff with effect from their ‘staging date’. This date is determined by the number of employees on the largest payroll as at 1 April 2012. The Pensions Regulator will notify employers of their date 12 months in advance. Here’s a summary of what you need to do before that staging date kicks in.
Identify your workforce
‘Having payroll systems that can cope with monitoring the movement of staff between these categories will be absolutely essential to complying with the requirements’
First you need to identify who your ‘workers’ are. Essentially, this is anyone who works under a contract of employment or has a contract to perform services personally and not under their own business. Close attention should be paid to the terms on which agency workers, secondees and contract workers are employed, as they may be caught. Non-executive directors are not classed as workers. Once you have identified your ‘workers’ they need to be split into three distinct groups. The first covers workers in the UK aged between 22 and State Pension Age, who earn more than £8,105 pa. This group are ‘eligible jobholders’ and must be automatically enrolled into a scheme from the staging date. Employers must pay contributions on their behalf. Workers who fall outside this age range and/or earn less than £8,105 pa are called ‘non-eligible jobholders’. Despite the name they are actually eligible for pension contributions! These members don’t have to be automatically enrolled, but they can opt in to the pension arrangement. If they do, the employer must pay contributions for them.
26 | IoD Scotland Winter 2012
Employers need to have a qualifying workplace pension scheme into which the eligible jobholders can be automatically enrolled. This will vary by employer depending on what arrangements are currently in place. Most arrangements are likely to be defined contribution schemes. Even if you have such a scheme in place at the moment, it is worth reviewing for the following reasons: Make sure that the pensionable earnings definitions, minimum contribution rates and entry ages in your current arrangement comply with the definitions required for qualifying workplace schemes. If they don’t changes will be needed. If you have a group personal pension or stakeholder plan it is worth reviewing the terms of the contract. You may be able to get better terms elsewhere, or improved terms with your current provider if you expect the number of members to increase significantly. It may be easier and cheaper to use the National Employment Savings Trust (NEST) or one of the new comparable funds rather than set up or continue with an existing arrangement. These points scratch the surface of the auto enrolment requirements, but set out some key issues to consider to get started. Other key issues include how much to contribute, what salary to base contributions on, how to deal with refunds for members who opt out and the communication requirements with staff. Careful management is essential and we recommend employers start the process at least 12 months ahead of their staging date.
Acting as one team The UK’s largest independent provider of actuarial, administration and consultancy services Our services include: • Corporate Consulting
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Economic policy
qe: For better or worse? Quantitative Easing in the UK was introduced in 2009. Richard Carter, Senior Fixed Interest Specialist at Quilter, examines what impact it has had on the economy and how much longer can we expect it to continue? As we are now more than three years into the Bank of England’s Quantitative Easing (QE) programme – with a total of £375bn having been ‘printed’ – many are questioning whether it is actually working. After all, you would be hard-pressed to find anyone who feels wealthier than they did before QE started. The obvious response, although this may seem cold comfort, is that the situation would have been much worse without it. The reality, however, is that QE has not solved the economic problems or addressed eurozone issues although it has probably kept asset prices, including equities and corporate bonds, higher than would otherwise have been the case. This in turn has lowered bond yields dramatically, which should have positive consequences including lower government borrowing costs. This is not to imply that there have been no negative consequences. While there have been few signs of a direct benefit for the high street, QE has definitely had an impact on savers. Investors in government bonds are getting much lower yields – the chart below shows that 10-year gilt yields have fallen to 1.85% (as at 31 October). As the Bank of England has been using the ‘electronic money’ it printed to buy gilts, it is no surprise that prices have gone up and yields have gone down.
6
Pension deficits are also a major concern. According to the Pension Protection Fund, the deficit on UK final salary pension schemes rose from £24.5bn in May 2011 to a record £312.1bn in May this year. Corporate pension schemes tend to own a lot of gilts and, with prices rising and yields falling, the gap between their assets and liabilities has widened. It is possible that companies with pension deficits will have to cover them from profits. This means that instead of building a factory which could benefit the wider economy, the monies will be used to top up pension schemes. Against this backdrop, the pension fund industry has, understandably, become increasingly vocal in its condemnation of QE.
A different way? Another question that must be asked is how long will QE continue? In addition to the original £200bn in 2009, there was a further £75bn in October 2011, £50bn in February 2012 and another £50bn tranche at the beginning of July. So far, the Bank of England has used this huge sum to buy conventional gilts. It now owns one-third of the UK gilt market so there is still plenty for it to snap up. However, with yields at
UK 10-Year Gilt Yields
Source: Bloomberg, 1 November 2012
5 4 % 3
The waiting game
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current levels, continuing down this road may not be the wisest choice. Some ‘mavericks’ on the Monetary Policy Committee are now saying that, if QE is to continue, the Bank needs to look elsewhere – possibly to index-linked gilts or even corporate bonds. This is clearly a more risky route. The Bank is indemnified by the government for any losses it incurs on gilts. If it were to buy corporate bonds, it would be taking a credit risk and would probably only do so if the government was prepared to extend the indemnity. Meanwhile, the effect of QE seems to be running out of steam and the situation has not been helped by inflammatory headlines with the government blaming everything on the eurozone crisis. One key problem is that the Bank is unable to cut interest rates much further but the government is committed to reducing the deficit. When fiscal policy is very tight, monetary policy needs to be loose. QE is an important element of what the authorities are trying to achieve as it is partly designed to offset any negative effect on growth.
So what prompted the most recent tranche of QE? The Bank of England believes that the eurozone crisis is battering business confidence and the deal struck at the eurozone summit in late June certainly appears to have done little to calm fears of the euro collapsing. Unsurprisingly, there was a lukewarm response to the injection of a further £50bn,
A seasonal word of warning Christmas gift-giving is a nice gesture but it comes with its own tax rules, says Fiona Donaldson
with critics warning that QE will not in itself propel the economy out of recession and any further moves would only increase the pressures on pension funds and savings. It therefore seems likely that the Bank will need to use other measures to boost the economy – for example, new lending schemes and making credit more widely available. The situation could change if, by some miracle, the eurozone is able to get its act together, financial markets rally and confidence improves. Otherwise, it is hard to know when the Bank of England will stop QE. The end of the programme still appears to be some way off and is unlikely to happen unless the eurozone crisis is resolved. How and when that will be is still anyone’s guess.
What next for the Old Lady? (pictured above): While the Bank of England’s previous attempts to boost the economy with quantitative easing have been well-received, it’s likely that further moves would not be welcomed as enthusiastically
About Quilter
Quilter provides bespoke investment management for private clients, trusts, charities and pension funds. For further information about Quilter’s services, contact: Alan Cameron, Head of Glasgow Office t: 0141 222 4000 e: alancameron@quilter.com w: www.quilter.com
Alan Aitchison, Head of Edinburgh Office t: 0131 221 8500 e: alanaitchison@quilter.com w: www.quilter.com
December is upon us and, in the run up to Christmas, it is worthwhile remembering some tax rules which are particularly relevant during the festive season. For clients and customers, most Christmas entertaining and gifts will be disallowable for tax purposes under general entertaining exclusions. However, in limited circumstances, gifts of up to £50 in value per person per year will attract tax relief. Very broadly, allowable gifts must incorporate a conspicuous advertisement for the donor, and can’t be food, drink, tobacco or a voucher. The full cost of staff social events is an allowable expense for the employer’s business, and VAT on costs can be reclaimed by VAT-registered employers. However, if events are also attended by customers or other “non-employees”, both tax relief and VAT recovery could be restricted. The most significant staff event is usually the Christmas party. To be tax-free for employees, it must be open to all staff, with a maximum spend of up to £150 per head. The £150 limit applies to all costs associated with the event, such as entertainment, food and drink, accommodation and transport (all inclusive of VAT), and the cost per head is arrived at by looking at all attendees, including spouses, partners and any other guests, and not just at employees. Beware though – exceed this and employees earning over £8,500 per year (including the value of benefits such as the Christmas party) will be taxable on the full amount – the £150 isn’t an allowance that reduces the cost of a more expensive event. So, if the cost per head is £145 – no tax liability. If £151, the full £151 is taxable (and the employer will pay employers’ NIC). If an employer pays for more than one social event during the year, it’s the one that takes the total per head over £150 that is taxable, so a careful record-keeping is important. For example, if an employer holds a Christmas party (£90 per head), a summer outing (£70 per head) and an annual staff lunch (£30 per head), the total spend will exceed £150 per head. The Christmas party and the lunch (£90 and £30) are less than the £150 limit and won’t be taxable but the summer outing at £70 per head will be. An employee taking a partner who isn’t an employee to the lunch will suffer a tax charge on £140, ie £70 x 2. If an employer can’t avoid the £150 limit, and feels it’s not in the Christmas spirit to tax their employees, they can meet this type of one-off liability on their behalf, through a PAYE Settlement Agreement (PSA). Christmas bonuses should be taxed under PAYE along with normal wages. Gift vouchers will usually also be taxable, although more generous employers may opt for a PSA as highlighted above. There are strict rules concerning gifts to employees, but employers can provide staff with chocolates, a turkey, or a bottle of wine at Christmas without causing any tax issues. Gifts of this nature are “trivial benefits”, aren’t taxable, and don’t have to be reported to the tax man each year. Unfortunately there’s no guidance on maximum value, so probably best not to give away Harrods hampers! • Fiona Donaldson is a Partner at Springfords LLP
IoD Scotland Winter 2012 | 29
Regional development
From vision to action: the Moray economic strategy
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he Moray Economic Strategy has been produced by the Moray Community Planning Partnership and provides a long-term strategy to diversify the economy of Moray. Moray is located between Aberdeen and Inverness and is connected to markets in the central belt and beyond by the A96 and A95 trunk roads, the Inverness – Aberdeen rail line, the airports at Aberdeen and Inverness and the cargo harbour at Buckie. Moray has considerable strengths and opportunities through the development of its key sectors: n World-renowned brands in food, drink and knitwear – Walkers, Baxters, Johnstons of Elgin, Speyside whisky and the individual distillers associated with it. n Significant natural and industrial tourism assets, a location in Cairngorms National Park, and being close to Royal Deeside, all provide a firm foundation for Moray tourism to develop as a high-profile, high-value sector. n Enterprise Area status designated by the Scottish Government and the allocation of £9.5 million to develop supporting infrastructure for the Forres Enterprise Park. In addition, Moray College building on university status and the completion of the Moray Life Science Centre mean that Moray is in the vanguard in the development of Scotland’s e-health sector. n Moray’s coastal location and its established engineering capacity and expertise can support Scotland’s development of a world-leading and diversified renewable energy sector. Buckie harbour has particular potential as an operations and maintenance base to service the offshore windfarms to be constructed in the Moray Firth. n There is strong indigenous demand in the engineering and manufacturing sectors. n A high quality of life and access to first-rate amenities and landscape are listed among the top qualities of the area. n Moray boasts a strong work ethic. n There is a close relationship between the public sector, business, and MOD sectors. The Moray Community Planning Partnership is a partnership comprising Moray Council, Highlands and Islands Enterprise, Moray College UHI, NHS Grampian, Moray Chamber of Commerce, Grampian Police, Grampian Fire and Rescue,
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Bright economic future: The Forres Enterprise Park (left) and an artist’s impression of the planned Moray Life Sciences Centre (below)
Pictures courtesy of Highlands & Islands Enterprise
HITRANS, and the voluntary sector. The partnership recognised that in producing the Moray Economic Strategy a comprehensive approach was required, involving all the community planning partners working together with the Scottish Government, the defence sector, business, residents, and investors nationally and internationally. The partnership has developed a vision for Moray, backed by a focused plan of action to deliver a vibrant 21st century region with a broad and diversified business base. The aims for Moray are clear: to deliver population growth to potentially exceed 90,000; employment growth, with the creation of more than 5,000 jobs and a focus on engineering, science and technology. The ambition is also to raise earnings above the Scottish average. Chairman of the Moray Economic Partnership, Elgin businessman Jim Royan, said: “Moray has seen some real progress through building on the energy and partnership between the private and public sectors. Early initiatives we have developed together include receiving inward investments from life science business Accunostics and IT services company ATOS. “There has also been a number of events with businesses in growth sectors to develop priorities and a protocol developed to give priority to planning applicants within the Forres Life Sciences Enterprise Area.
Investments have also been recently announced by Baxters, Diageo, Capita and Forsyths”. Chairman of the Moray Community Planning Board, Councillor Allan Wright commented that while many ideas can be implemented relatively quickly, the action plan is for the long term, will evolve over time and will respond to the strategic needs of business and the community. Councillor Wright continued: “The action plan identifies a range of opportunities, with projects for investment in broadband, renewable energy, life sciences, tourism and an Elgin City Centre Masterplan. “With university status and the completion of the Moray Life Sciences Centre, the strong relationship between education and health form a platform for innovation across these key sectors.” Community Planning Partnership Board member and chair of Moray Council’s economic development and infrastructure services committee, Councillor Fiona Murdoch, said: “The Moray Economic Strategy has enormous potential to guide the expansion and diversification of Moray’s economy. “By maintaining the partnership between the public sector agencies, the business community and our residents, we can, together, ensure that Moray grows as an attractive place to live, learn, work and in which to invest.”
Want to know more? The Moray Economic Strategy can be accessed at: www.moray.gov.uk For further information, call David Duncan on 01343 563043 or Rowena MacDougall on 01343 563265.
Special feature: Flood warning Business ruin: A furniture store hit by flooding earlier this year. Increasingly, business owners are being left to count the cost of floodrelated damage
Don’t let this be you
L
ast Sunday I was stood looking at a company which had just been inundated by a two feet of flood water. Distressing yes, heartbreaking more so, when one realises that this is the second time the property has been flooded in less than 12 months. Computers lay at crazy angles, files and documents lay strewn like confetti across the floor, all ruined by the unexpected deluge that flooded into the property in the early hours of Sunday morning. Now a firm has to once again face the long process of repair and reinstatement, and each night the directors’ children cry themselves to sleep because of the stress in the home. The current debate about flood management in the UK involves the notion of making space for water, recognising the fact that it is impractical to defend large floodplains to a standard which excludes any possibility of flooding. Coupled with development controls to discourage new building in the floodplain is the desire to encourage inhabitants living in an ‘at risk area’ to render themselves less vulnerable to flood damage by building resilience into flood-risk property. Advice on property flood protection is available via the Scottish Flood Forum, SEPA and insurers’ websites but historically take up is very low. In a bid to increase the installation of individual flood protection measures some local authorities here in Scotland have invested in a subsidised grant schemes. The Scottish Flood Forum is currently working to get all Scottish councils to take up this approach. A review of the international literature relating to flood-proofing property and the attitudes of floodplain occupiers reveal that there are many barriers to
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overcome in encouraging the installation of resilient measures. Financial concerns are, of course, a primary factor; the presence of almost universal flood insurance cover for UK residents certainly detracts from motivation to take individual responsibility. Any proposed scheme must contend with the preference for community measures, informational barriers, emotional constraints, aesthetic considerations and timing issues. The provision of finance for resilient schemes could be more effective if incorporated within the reinstatement process in order to minimise cost, distress and disruption to the business owner, but that, of course, means the property must first suffer flood damage – a process we would not recommend. So what should be done? Ask yourselves some key questions. First, are you at flood risk? Have you signed up to the SEPA flood warning scheme? Look at your property – (home and business). What can be done to protect it from the risk of flooding? If you have been flooded what have you done to prevent a reoccurrence of the same happening again?
Want to know more? Need help, need advice? The Scottish Flood Forum is there for you. Visit our website at www.scottishfloodforum.org, ask about our Business Continuity training or learn about the flood protection we do throughout Scotland. And what of the business owner I started this article with? His last words as we left the devastation were ‘I wish we had done something to protect our property’ Please don’t leave it too late – tomorrow just might be.
“The business owner’s last words as we left the devastation were ‘I wish we had done something to protect our property...’
Scottish
Flood Forum
supporting flood risk communities
You may not be aware but your business could be at risk from flooding or you may already have been a victim of flooding. Statistics show that 60% of SME’s go out of business within a year following a flood incident. Either way what can you do to prevent flooding or a reoccurrence of flooding? •
Seek professional help and advice from the Scottish Flood Forum
•
Sign up to the SEPA flood warning scheme
•
Consider what can be done to protect your property
At the Scottish Flood Forum we provide impartial support to all Businesses who have been flooded or are at risk from flooding. We advise on property flood protection and business continuity assessment and offer a wide range of pro-active training and flood protection products to help. Visit www.scottishfloodforum.org for expert flood protection advice to ensure your business is safe from the disruption flooding can cause
The last words these business owners said as they left their flooded properties were
“We wish we had done something to protect our businesses – it’s too late now”
Call us on 01738 448411 or 0774 770 2299
Tech matters
Scotland must work hard to retain place at IT’s top table A growing group of senior business leaders led by former European CEO of Weir Engineering Group, Global Scot William (Bill) Adam, is calling on Scotland to better utilise technology to strengthen its knowledge economy and regain its entrepreneurial spirit. As a new Harvard Business Review report stresses the number one enemy of creativity is fear of failure, Adam, a founder and senior advisor to Knowledge Economy Network (KEN), which has the Secretariat in Brussels, membership in 14 countries and operations in several, urges Scotland plc to be brave. This column has previously quoted Exception’s Scott McGlinchey as calling for a debate on the need for a tech-based strategy. “It is vital that a forward-looking Scotland can offer to potential investors and existing commercial concerns alike the best possible tech skill sets available,” said the Scottish IT expert’s chief officer. “Also the right infrastructure to support growth of companies and innovation.” Taking up McGlinchey’s point, Adam says: “Policy makers and stakeholders have to come together – as a matter of urgency – to develop and strengthen Scotland’s knowledge-based international competitiveness. This especially involves select issues in four domains – from higher education to research and development, and innovation onto entrepreneurship.” According to KEN’s knowledge economy country ratings Scotland, along with the rest of the UK, slipped from 4th to 13th during 2007-2012. It is compiled from five well-recognised ratings: the World Bank, two from the World
by Bill Magee Scottish Business Technology Writer of the Year Economic Forum, the Economist Intelligence Unit, and INSEAD where, to put things in perspective, the US went from position one to six, Japan from 11 to 18, and France from 17 to 21. Among the top 20 countries, there were four Asian countries, now five. Adam, an eminent engineer who was CEO of Yale & Towne, and also ran Firestone Tyre & Rubber out of Europe, recently gave the keynote at the newly-established Summerhall cultural/ commercial hub in Edinburgh. He maintains that with very few exceptions, we are not pursuing vigorously enough high-quality tech-based activity to the point where we are neglecting excellence. Scotland, along with the Swedes, does remain better than the European average (which is four times lower than the US) “but unless we upgrade the venture capital operations we cannot expect to even retain our present level.” In the States innovative software and tech-based manufacturing firms “go global” from the very start and reach the $100m mark much faster – mainly due to the boost of
“Policy makers and stakeholders have to come together – as a matter of urgency – to develop and strengthen Scotland’s knowledge-based international competitiveness...” 36 | IoD Scotland Winter 2012
independent, private venture capital leveraged by government funds plus freedom to enjoy an eager, large domestic market. With the benefit of extensive Euro-wide commercial experience, Adam adds: “The biggest paradox is how Scotland and its young generations enjoy less internationalism through education than most youngsters in Europe and beyond. “And it should not be forgotten that it was precisely the unique Scottish public school system that made us a global intellectual and engineering power. In times of knowledge economy the quality of human capital is absolutely crucial. “Too many British start-ups operate in a self-imposed UK market even though we have been part of the EU since 1973!” From his experience in venture capital, “Scottish Enterprise is doing a good job, but VC investors need support in their exit strategies. Our entrepreneurs are often not ambitious enough and we lack fast growth companies.” What is Scotland doing? SE reported that firms have secured £9.6m from banks, private investors and other funding sources this year after tapping into support from the Scottish Investment Bank (SIB). Deputy First Minister Nicola Sturgeon has released the first annual Scotland’s Digital Future progress report, predicting high speed broadband will create nearly 15,000 new jobs over the next 15 years. Edinburgh and Glasgow have been included in a UK-cities 4G booster, promising superfast mobile networks up to five times faster than existing 3G services.
PR isn’t just about ‘light and frothy’ good news stories – it should be a key part of your overall management strategy, says Ken McEwen
KEN is offering itself up to help in establishing a Scotland/UK/Europe-inspired ‘Venture Management Group’ to assist investment by coaching partners on direct knowledge of advanced business culture along with key connections. Adam says that together with co-founders IIse van den Meijdenberg, chair of IOD Netherlands, and Arnoud J.M.Luttikhuis, director of Fluvius Projects, plus several associated networks: “I am confident we can make a difference.” His comments are backed up by those of former White House advisor Pippa Malgrem who called on Scotland to take “calculated risks” to attract new global business by equipping the country with the most modern digital communications available: “We are talking a lot of wires!” Malgrem, now president of Principalis Asset Management, urges Scotland to pursue an entrepreneur-led, city-based hi-tech physical infrastructure. “Scotland has a long history of asset management stretching back centuries and that represents calculated risk taking on a truly global investors’ scale. It should aspire to that again in a modern setting.” Kim Winser, the prolific businesswoman and a former senior executive at Marks & Spencer and Pringle and a 3i advisor, gave a similar message at Heriot-Watt University’s 2012 Converge Challenge highlighting technology stars of the future. “The rest of the UK could learn a thing or two from Scotland.” Equally, Geert Rensen, COO of the ‘Be Informed’ website based in the Netherlands and recently launched in Scotland, agreed: “Scotland has a lot going for it.” Back to KEN, which gives awards for distinguished performance in knowledge economy and society. This year the awardees were: Japan for university reform, Denmark for innovation system, TUBITAK for R&D funding, US SBA for its VC support scheme, and the BBC for its unique contribution to the knowledge society. Scotland next? • You can contact Bill Adam through www. knowledge-economy.net Catch my Daily TechPost (most days!) on Twitter #billamagee and regular tech microblog at www.Kiltr.com/
Don’t bury your head in the sand
S
ome years ago I spluttered over my cornflakes when I read a client’s name unexpectedly splashed across the morning headlines. The story suggested the business was on the brink of collapse, with the potential loss of a substantial number of jobs. This was the first I had heard of financial problems. Just the previous week I had been at my usual meeting with the chairman talking in positive terms about our PR programme. He seemed upbeat and was happily talking about new contracts and new opportunities. I was still digesting the shocking news when the phone rang and I was summonsed to meet with the management team. When I arrived, they were sat in the boardroom with the company’s accountant. It appears they had been in negotiation with the bank and were hoping to conclude a deal that very day. However, the banner headlines had shaken the bank’s confidence so severely that it was, at that very moment, in the process of putting the company into liquidation. The story in the paper was instigated by an employee who had been recently dismissed. If the individual’s intention was to cause maximum difficulties for his former employer after his dismissal, he had certainly succeeded. I am not suggesting that PR could definitely have saved the day. But coming in after the plug had been pulled, all we could do was to marshal the facts about the collapse. Had we had the conversation even just 24 hours before, there is the possibility the story could have been mitigated, or maybe even delayed until after the rescue deal was finalised. The purpose of telling this sad tale is to flag up the importance of not burying your head in the sand in the hope that things will work out. Perhaps because of the ‘light and frothy’ image that some PR companies cultivate, there is a lack of understanding of the heavyweight role PR can play. This may explain the reticence of some business executives to keep their PR advisers ‘in the loop’. It’s as if they see informing the PR consultant as tantamount to going public. If you have chosen your PR consultant wisely, you should have the same sort of trusting relationship that you have with other professional advisers. You need to feel comfortable sharing business issues, knowing that all your advisers will have the knowledge and experience to give you the best advice when it matters. If you don’t have that sort of ‘trusted adviser’ relationship, it is probably time you changed your PR consultant. • Ken McEwen, the past chairman of IoD Aberdeen, has his own PR consultancy business – Ken McEwen Public Relations. More at www.kenmcewen.com.
IoD Scotland Winter 2012 | 37
Members’ talk What makes our members tick? In each issue of IoD Scotland, we’ll talk to one to find out a little bit more about them, their business – and a little bit more besides First up we have John Green, MD at JG Collection
Success is SMART working – and quick reactions value is in its membership. Our business is very much relationship driven and knowledge intensive. We’re learning all the time – even if it’s how not to do things – and there is nothing better than listening and engaging with other business leaders so we can improve ourselves.
n What’s your current role? What do the duties entail? I’m the managing director at JG Collection. My role is to build and maintain relationships with our hotel main partners and look after the important corporate market and manage the new business coming through. n What is the most challenging aspect of your role? The luxury hospitality industry is enormously competitive, therefore the challenge will always be to create demand and a unique advantage for our members. n What positions did you hold prior to your current one? I was general manager at The Hempel and director of sales at The Landmark. n How has your business handled the recession? Did you change the way you manage or operate? We constantly look at the way we work so we can ensure we are working to the SMART mantra (work smarter, don’t make it harder!) and the introduction of better systems that enable us to both measure and enhance our communications with our customers and partners. Digital is clearly playing a large role in this. n Do you see signs of a more positive outlook for both your business and the economy as a whole – or not? It’s our collective belief that because of the way in which we work, that building honest and integral relationships with our clients are the foundation of our business, which is extremely important in the current economy. In this economic climate, individually we cannot have a significant impact, however, together we can change our approach to cater for it and remain positive. Confidence plays a crucial part in
38 | IoD Scotland Winter 2012
what we do and how I feel we should all approach the economy. JG Collection is definitely from a glass half-full school! n What are the major opportunities in your sector? For an independent hotelier at this time, the ability to react quickly in terms of turnaround and the decision-making process is definitely an advantage and it will always be a question of spreading risk. If you’re too reliant on one sector then this will be an issue. Take the energy sector, renewable and social media: you only need to look at the business pages to see where the developments are. For the hotel industry there has been a larger growth spurt in lowcost sectors and many of the larger brands jumping on the ‘boutique bandwagon’, as I call it. Established brands such as Firmdale, Thompson and Soho House continue to grow, alongside properties such as Citizen M. n Why did you join the IoD? What do you see as its role in the future? IoD is a respected organisation and its
n Independence: Fiercely pro, fiercely against, or fiercely bored already? I’m based in London, call me oldfashioned but I believe that given our respective economies, especially at this time, going separate ways would not be for the greater good. I know I need to listen more to the arguments on both sides but as I work in London and travel to Scotland extensively I don’t sense an overwhelming desire for independence – but perhaps I need meet more people! n How do you relax away from the office? By playing great golf courses badly... not sure how relaxing that is... n Where’s your ideal holiday destination? There are simply too many great places to visit, and the world is a large place so there are too many destinations to travel too, so perhaps I’ve just not found my ideal destination yet. That said, I am as happy at Alladale Wilderness Reserve as I am in Tuscany, New York and the South of France. Family, friends and experiences are the ingredients for a great holiday, and while the location has the potential to enhance that holiday, I am a great believer in surrounding yourself with the ones you care about the most, both family and friends, and live and let live, as we never seem to get enough quality time with them throughout our working lives. n www.jg-collection.com
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Qualifications are changing
Scottish Qualifications Authority are introducing new qualifications in Scotland to support Curriculum for Excellence. The new Nationals, Highers and Advanced Highers will equip learners with the skills, knowledge and understanding they will need to succeed beyond the classroom in the 21st century. The first National 1 to National 5 qualifications will commence from August 2013. For more information visit www.sqa.org.uk/curriculumforexcellence