Are tackling inequality & improving business performance interdependent? A review of “The Reconnected Leader” by Norman Pickavance

The Reconnected Leader: An Executive’s guide to creating responsible, purposeful and valuable organisations – Norman Pickavance

People who want to reduce inequality rarely talk about improving business performance and people who want to improve business performance rarely talk about reducing inequality, which is a shame because they probably need each other, as this book – by  an advisor to the “A Blueprint for Better Business” initiative, with experience in companies from Marconi to Morrison’s – shows. 

Pickavance talks of corporate culture that distinguishes between “the people who matter – the top talent” and the rest of workforce, customers and community.  Such a culture clearly encourages a corporate mind-set of inequality in which it is seems reasonable to pay frontline workers a fraction of a percent the amount the CEO gets, and creates “a growing risk that the fabric of business and society will start to come apart” but it is also bad business:

According to Pickavance “the McKinsey-inspired War for Talent […] led leaders to focus on a smaller and smaller cadre of people at the top… 99 per cent of the population feels like they have missed out. [This] can have a highly damaging effect on confidence and performance”. It also creates a “collapse of [public] trust in the corporate sector”. This has implications for the bottom line, because it creates “declining workforce engagement levels […] costing the UK £25 billion a year in lost productivity”. Pickavance also relates disastrous failures, such as BP’s Gulf of Mexico spill and the Libor scandal to business leaders inhabiting a “boardroom bubble”. But he  also points to a new risk: that unless companies –and economies – change their ways, they will be outcompeted by those that adopt innovative, collaborative models.

Any notion that this is a perceptions problem, which can be solved by bolt-on Ethical or CSR policies is dismissed, but Pickavance doesn’t throw the baby out with the bathwater: “the problem lies not in capitalism per se but in the way our major organisations are being led”.

Pickavance’s solutions, as the title suggests, centre on the need for business leaders to reconnect with workforces, customers, communities and other stakeholders, to nurture a corporate culture of trust with a “spirit of shared enterprise”, creating conditions for innovation.  On a practical level Pickavance points to initiatives such as advisory boards open to “dissenting voices, whether they be customers or suppliers or indeed representatives of employee groups like trade unions” and establishing “ratios for differentials between senior leaders and frontline employees”. He points to companies like Tata that “see it as their job” to invest in people and close skills gaps, and Handelsbanken where profits are shared equally across the organisation to more extreme examples like Gore, whose CEO is elected by the staff.

But this book isn’t about individual initiatives; it is about a rethinking of the role of business in society and the role of managers in business, whose success, according to Pickavance, depends on “the extent to which they are prepared to relinquish power”. Building this new model is no easy task. Just to draw up a roadmap for its creation (on any scale) requires the collaboration of management, employees, customers, investors, civil society and policymakers, in precisely the spirit of shared enterprise that Pickavance advocates.

But Pickavance’s vision looks worth the effort. He points to the Roosevelt administration, which “sought to reframe the role of business in society [towards] playing a stewardship role. [This] lasted for almost 50 years, during which time the pay gap between the highest and the lowest was halved [and] coincided with some of the most impressive growth rates in the 20th century [it] synthesized economic and social good”.

Duncan Exley, Director of the Equality Trust

The Reconnected Leader is available here

This post is part of a series where members of staff at The Equality Trust review books that have something interesting to say about inequality. We also now have a new Recommended Books section of the website where you can find a list of the best books to read to learn about inequality.

The Equality Trust has an affiliate link with Blackwell’s bookshop which means that if you purchase a book after clicking through from a link on our website we will receive a small portion of the proceeds.