Ruth Sunderland of The Observer (aka Decent Pravda) is on a campaign for more women on the boards of big companies. It’s a worthy aim in itself, but I don’t believe for a moment it will address any of the things she thinks.
In fact, the problem is that it’s nowhere near radical enough. For a start, the board of directors in itself is an institution that doesn’t have a great record recently. In all the major corporate failures of our time, it has been quite clear that the board didn’t exert real supervision, control, or discipline over the executive management. Neither executive nor nonexecutive directors pulled the skin off a rice pudding, compared to the kings of management.
Even in those countries where there is a supervisory board structure, it’s been fairly routine for scandal to break out; just look at the shenanigans on Volkswagen’s aufsichtsrat. Part of the point of a supervisory board is to represent groups of people who wouldn’t otherwise have a direct voice – trade unionists, suppliers, customers. This brings me to my next point.
Swapping out individual directors, or groups of ’em, for others doesn’t have a great record either. We’ve tried replacing capitalists with civil servants, then replacing the civil servants with capitalists. Both versions were capable of spectacular mismanagement. Elsewhere in the world, there have been efforts to change the kind of people who are company directors; in South Africa, for example, there was a serious effort to replace old fat corrupt white bullies. The upshot has been their replacement with old fat corrupt black bullies. This is not a notable triumph.
The conclusion is surely that it’s not that the boss is a man, it’s that the boss is a boss. Rebecca Mark’s division at Enron was a byword for fantastic hubris, backstabbing, corruption, and eventual failure. Padmasree Warrior was briefly a superstar as CTO of Motorola, but took some catastrophically dire decisions that have left the company staring at a dark future. Despite this, she got out in time and a cloud of money, and was even considered as the US Government’s chief of IT. Both of these tales are all about authoritarianism, autocracy, and arrogance, to say nothing of greed; these are the failings of managerialism.
Daniel Davies holds that the Royal Bank of Scotland was the best-run bank in London, and that the acquisition of ABN-AMRO was the decisive blunder that sank it. He certainly has a point; the price was amazingly high, and it is said that 80 per cent of the shitty securities RBS is trying to get rid of came from ABN-AMRO’s portfolios. This is interesting; it’s impossible to be a really good bank without knowledge and competence being diffused through the whole organisation. If he’s right, it wasn’t Fred Goodwin that made it that way, but the efforts of loan officers, investment bankers, and branch clerks who knew their customers, back-office and IT staff who were efficient, traders who got in or out first.
But Goodwin’s hunt for the white whale of global scale was his alone. It was his decision, his project, driven from the distant operations centre, peering down the drone video feeds. It required secrecy, hubris, and absolute obedience, the eternal friends of boss culture. And it would have been no different had he been Frederica Goodwin; she would still have been the Universal CEO, up there on the admiral’s bridge, the one without all the telephones that run into the wheelhouse or the operations room, so as not to disturb the great one.