City PR can keep eye on poor bosses

One of the things they ought to teach in business school, but do not, is that while bad management can screw up a good business, good management can rarely rescue a bad one.

Anthony Hilton
Anthony Hilton

One could go further and say there is no business so good that management cannot destroy it and so many of the people who are feted for their exceptional management skills possess no such thing.

They have enough aggression to drive them to the top, but once there, what appears to be success may be because they were in the right place at the right time.

Mortgage lending was like this and ought still to be. What could be easier than assessing how much people can afford to pay in interest, valuing a house and applying these constraints to what is lent so that the maximum is always below what the house is worth and affordable to the borrower?

Unfortunately these standards got eroded when management began to be incentivised to deliver faster growth. Those setting the incentives seem not to have realised that it is the easiest thing in banking to make more loans. The hard part is getting the money back again.

Forgetting this led to the Northern Rock fiasco last year and Bradford & Bingley this week, and several others that will no doubt emerge in the coming months.

But even if the primary fault lies with management, what is also obvious and much harder to admit is the complicity of the press and PR industries in contributing to these disasters.

There was a time when a sceptical press would examine business growth to see where it came from and whether it was sustainable. That was also the era of specialist journalists where people who followed a sector knew as much about it as those running the businesses.

Today, or certainly until the recent reality check, journalists and PROs no longer seem to care how growth is achieved as long as it looks good - thereby opening the door to everything from accounting tricks to one-off gimmicks that boost short-term profits. Worse, those in management who remain cautious get ridiculed and their position made untenable.

The old reality has given way to the new superficiality. That is as much the fault of press and PR as any management.

Anthony Hilton is City commentator on London's Evening Standard

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