Good Business / Bad Business?

A need for fairness underpins the attitudes of most of the people I meet. They see the behaviour of senior bankers, of energy companies and of many businesses who charge exorbitant amounts for poor quality goods and services. The indifferent attitude encountered when dealing with many organisations is all too common place and the idea that customers should be treated with respect and put first is often regarded with little importance. Those who work in both public and private sectors can see the difference between good and bad employment practices. And it is no surprise that those organisations where the customer is not treated well are the same ones where staff are not treated well either.

From the way that customers are over charged or mis-sold services they don’t need to the way that managers treat their staff, there is plenty of evidence of poor business practice. The scandal of directors pay going up by 49% when the rest of the country faces severe austerity, the bonus culture for the top bankers and the way that energy prices go up at the first whiff of an increase in the wholesale price but take far longer to fall when wholesale prices are falling. These are all examples of business practices which benefit the few and are anything but fair as far as the many are concerned.

But a balanced approach suggests we look for examples of good practice as well. And there are plenty of good examples too. Managers often look after their staff and there are plenty of organisations where there is a culture which supports staff and customers. Many businesses charge sensible amounts. Many especially smaller businesses are a key part of their local community.

The pressures on big companies to deliver increasing shareholder value can often lead to short term decisions and management approaches which hurt staff or customers either in the short or long term. Cutting costs is often used as a way of improving results. But it can do lasting damage not least to those who lose their jobs or are put under the pressure of every increasing workloads and monitored by aggressive managers. No wonder that in staff surveys, the number one concern is often “The relationship with my manager”. Or that stress is one of the most common causes of workplace sickness.

Before I was elected to parliament, I ran a training company. We worked with a number of energy suppliers, telecoms companies and retailers. Some of our clients were genuinely committed to developing their staff and to a culture of good management. They recognised that good business practice puts staff first because it is the right way to operate. But good business practice is not just a result of a romantic ideal of how business should be.

The Chartered Institute of Personnel and Development has measured the results of good management and good HR practices. Businesses that look after their staff often in turn put customer, community and environment first. There is a strong correlation between good staff relations and business results. Those companies who invest in good, focused training generally measure a return on that investment in the short term and in the longer term. In a downturn business leaders are tempted to cut corners and what is regarded as fluffy stuff goes out the window. But history shows that those businesses who invest through the tough times reap the benefits in the good times and the bad. When staff know that it is difficult to find another job, the temptation for managers is to use this reality as leverage to squeeze more out of fewer staff. In fact, demonstrating support for staff in the tough times can be better seen as a sign of stability and a reward for loyalty. Human nature means that while people may respond to the stick in the short-term, the carrot may in reality be a better bet in both short and long terms.

The argument in favour of a fiscal stimulus by government is well rehearsed as the key to a strong and sustained economy. But the value of investing in public sector staff at a tough time should be remembered as well. When we talk of good and bad business practice, we should consider the practices of all sectors, including the public sector. Government is there to lead and that includes leading by example. The way we treat the people who look after our sick and vulnerable, teach our children and keep us safe speaks volumes for the kind of society we want to live in. But it also sends a message to businesses large and small that this is how we do business and this is how we treat the people who work for us.

Bill Esterson is the Labour MP for Sefton Central and was director of Leaps and Bounds Training before being elected to parliament