Corporate self-confidence has its own problems

Success tends to breed success. But a growing sense of corporate self-confidence can bring problems of its own. How does a company prevent p...

Success tends to breed success. But a growing sense of corporate self-confidence can bring problems of its own. How does a company prevent pride in its achievements from degenerating into complacency and stagnation? Financial Times writes that few people have more cause to dwell on this issue than Sir Clive Thompson, the 54-year-old chief executive of Rentokil Initial, the international service group, which has the distinction of having increased its earnings by more than 20 per cent for 14 of the past 15 years.

The danger, according to Sir Clive, is that employees start to believe that the company has “almost a divine right to be successful”. People begin to feel that success will come irrespective of individual divisions’ results.Another threat is that success may erode managers’ willingness to embrace Rentokil’s culture. It would be natural for regional managing directors to begin to think that their style was the reason for their particular division’s success. Eventually, the company could break down into baronies, each with a distinctive sub-culture.

Some might be successful but, on balance, he says, they would be unlikely to be an improvement on the original. Sir Clive is emphatically opposed to giving latitude to individual divisions: “I believe in one culture, one company. I believe that there is one best way of doing things today.” He tries to achieve this uniformity by finding the best management practices through a process of evaluation, and imposing them throughout the group. In addition, managers regularly move between divisions, businesses and countries. Sir Clive is happy to concede that his concern for centralised control is unfashionable. What works in his business, he points out, may not necessarily be transferable to another. He says that the decentralised approach that may be needed to foster innovation in, say, a bio-technology company, is unlikely to be suitable for a business such as Rentokil.

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“The single most important factor of success for our company is the ability to recruit and train blue-collar workers who can work with relatively low levels of supervision,” he says.

“This is a strength that can be transmitted by company to company, industry to industry, country to country. You cannot allow a strength like that to be diluted by allowing a different interpretation of it. When the actor of success is a management system, you must nourish and protect the management system. What that means is control.” But the lack of freedom for individual managers merely serves to underline the basic dilemma: how to motivate managers to continue delivering exceptional performance in a company that is already successful?

Shell promises more top jobs for women

Royal Dutch-Shell, one of the world’s biggest oil companies, plans to shake up its tradition-bound corporate culture by increasing the number of women and range of nationalities in its top management tier, reports the Financial Times. If successful, the move will transform the current male-dominated and overwhelmingly British and Dutch ranks of Shell’s senior executives.

Over the next five years the company plans to increase the number of women in the top 400 management positions from the present 4 per cent to about 20 per cent. The narrowness of Shell’s senior management base has been cited by critics as one reason why it has struggled with rapid change in its business environment.

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John Hofmeister, Shell’s international head of human resources, says that the company had completed a study into management diversity as part of its long-term strategy to transform the heavily bureaucratic group into a more nimble competitor.