Tuesday, 24 February 2009

Business not always best?

Gordon Brown writes in The Observer on Sunday on the need for a return to responsible banking. He argues people are understandably angry about the banks and outlines government action on the financial crisis. He is right to take action. And to work globally.

The shine is coming off business. The ritual obeisance paid to any businessman who came in to save the health service, or reform education, is now fortunately out of fashion. We worshipped their money as it was poured into academies. We listened in a reverential hush as we were lectured on how to run a businesslike public service.

Well now we see all that 'glistens is not gold'. The bonus culture that we were told was about rewarding good performance and productivity turns out to have destabilised the economy. And all those rich businessmen feted by Governments turn out not be not quite so clever after all.

So will we see a fundamental shift in attitude? Will we get reform of commercial governance? Will we see a proper and sustained approach to corporate social responsibility?

The third sector could be at the tipping point in this debate. Our emphasis on the softer skills of leadership; motivation and inspiration, ethical approaches to the workforce and to our wider contribution to society and the economy is an approach now needed in business and as a sector we are a major economic player - an annual income of £120 billion and 1.34m staff we can show both commerce and the state how to run efficient but socially accountable business.

It is the third sector that offers the way forward for a reformed business sector.

Some politicians have argued that now is the time to go back to the State and the public sector. Some local authorities seem to think they should retrench and bring back services in-house. But it is not about a return to statism. The public sector has also been shown to have failed as it is unable to provide citizen focused services. State institutions remains mired in an inflexible and bureaucratic approach to delivery.

But let's not be carried away by stereotypes. Whilst both the public sector and business have shown their limitations, the sector too has a limited capacity. So partnerships and alliances across the public sector and the state to deliver citizen focused services, to create community cohesion and to create jobs.

So in the public anger against banks and business let's look to reform and partnership where the third sector provides an example of good practise.

ACEVO is developing a work stream on what makes for successful partnership - especially with business. We look to new forms of ownership and alliances. And we will campaign for governance and CSR reform for the business sector.

1 comment:

Janet F said...

Some good points, not so sure about others.
Yes, lots of businesses have failed because of the greed of a few, but the abilities of the majority of managers/staff in those businesses should not be underestimated - the third sectors' performance in (as you quote) "ethical approaches to the workforce" could be argued to not be that great - performance management isn't high (if you're going to be ethical towards ALL your workforce you have to performance manage the weaker members of the team) and employment tribunal use is much higher than in the private sector.

Organisations also need to be clear on what drives them - RBS, for example, has been described as failing because it tried to be too many types of business all at once. I believe that in the third sector there is the same risk - charities that lose their way (and their soul) through chasing the contract and, effectively, becoming an arm of the public sector. Our charities are a precious thing and the public deserve them to be taken care of properly - their leaders need to make sure they don't make the same mistakes as many businesses of late and believe their own hype.

However, you're right to say we shouldn't get carried away by stereotypes. This is the time for the right type of third sector organisation to come to the fore - less of the charity, more of the social business - whether this is devolved parts of an organisation at arms length (e.g. 'in partnership') with the original charity, or stand-alone organisations without links to a traditional 'charity', we need to get this right to a) protect charities for the future and b) build a 'third sector business' model that will work and grow (and there are some great examples already out there...).