Posts Tagged ‘Ethical Business Practices’

Tax avoidance, foreign companies and the real influence of Utility providers on our cost of living

Utility companies are in the news again and this time for exploiting the foreign ownership loopholes that are allowing an increasing number of monopolistic companies to avoid paying sizeable sums in tax.

Were it not for the near exponential rises that we seem to experience from energy and water companies alike on regular basis, you might be forgiven for having a little sympathy with a company which is struggling to make money.

But these are companies which are not only achieving great success in securing stratospheric profit margins from the services they provide using what appears to be increasing levels of media-friendly scaremongering; they are arguably doing so without making any real contribution to the wider society that pays them whilst customers also seem to pay for all their upgrade work as well.

This situation has of course been in the making for a considerable time and whilst it would serve the political interests of some groups to blame the problem on the process of privatisation in its basic sense, it is pretty certain that the sale of shares to everyday taxpayers was never intended as a direction of travel which would result in foreign ownership, or to the cartel like behaviour which has contributed to the creation of rip-off Britain.

Coalition Government or hung Parliaments don’t lend themselves well to dealing with issues of any real importance when they are in power as we all continue to witness each and every day. But that of course is when they face issues that we as a public are openly aware of because Politicians have chosen to acknowledge them for whatever politically expedient purpose that it might serve.

The real travesty with the issues regarding utility companies and the influence that they are having on the true cost of inflation to us all – which has this week been suggested to be as high as 25% – is that there is not even the will to talk about the true impact of their actions upon us all in Westminster.

With the economic fall-out of credit-card government and the continuation of spending with money that the UK simply doesn’t have, reality suggests that negligible or zero percent rises in wages for the workforces operating within the commercial and public sectors alike are here to stay. That benefit and service cuts will remain the uninventive and ill-considered weapon of choice used by a political elite which seems bereft of any consideration for the mechanics of life outside their own societal bubble.

However, there are choices for our leaders and within the constraints of Coalition Government or not, Politicians taking their responsibility to the Electorate seriously would and should all be using them.

Before anything else, acknowledgement that companies providing what are in fact essential services are profiteering and are misusing the opportunities that they have would be a significant step in itself. People would at least begin to feel that leaders are identifying with what real life is really like.

This would by its very nature have to been done with clarity and purpose and with much more than a mere suggestion of what action lies ahead. Another mealy-mouthed effort like that on the part of Politicians when it has come to addressing the previous actions and future behaviour of bankers simply will not do.

It has become clear that self-regulation in such key industries isn’t working for anybody but the companies themselves, and this is where those with Government responsibility should really be taking a lead.

The next step would be to regulate pricing to allow the true cost of service provision to be reflected in the prices that we pay and dictate the formula under which such Companies can raise funds for new and improved infrastructure which in most other industries would rightly come from the bottom line.

Because the services that these Companies provide are essential to everyone, profit should be capped and systems put in place through vigorous auditing processes  to ensure that clever accounting methods cannot provide a conduit through which different cost centres or budgetary areas can be manipulated to provide an enhanced dividend.

Company owners wouldn’t like this approach, but the fact remains that with services that customers have no alternative to use, profiteering before doing what is right has created a cash-cow for the few, whilst inflicting financial misery on the many in circumstances where people cannot even earn more just to compensate. That’s why foreign owners have been so happy to throw cash in the direction of companies in the UK that governments most other Countries would at least keep very close to State control and why our Politicians must now recognise the power and influence that these industries actually have in our everyday lives.

Finally, the time has long since passed when simplification of the Tax system was required on a comprehensive basis to stem the flow of revenue from leaving the Country that we desperately need and to which we are entitled.

Tax should be applied at the point of sale; not at the location where the account managers and owners  are based. This one simple and realistic change could find tax raised from the tills where coffees are physically bought; from the sale on the actual computer and screen where products are purchased; and from the meters where our power, gas and water are measured and supplied inside the houses in which we live.

Scary as the prospect of taking on the industrial and financial monoliths might seem, it is for reasons just like these that Politicians are Elected and why Governments are given power. It might not be easy, but if those who seek our votes at Elections take the trust we have given them seriously, it necessarily follows that they will use it for our benefit too.

Isn’t it time that they started living the mantra ‘action speaks louder than words’, rather than simply just paying lip service to it?

image thanks to source unknown

Osborne’s threats to break up Banks: True banking reform will take leadership by example rather than the issue of diktats to the financial leviathans for whom God is profit first and the interests of the very customers who keep them there come a distant second

February 7, 2013 Leave a comment

Commercial Altruism is perhaps an aspiration, but a term which certainly describes the kind of ethics that we need to see exhibited more often within industry and certainly within the Financial Sectors where its absence has been so painfully apparent.

Any resistance to George Osborne’s plans to require Banks to split their retail and less-stable investment arms in attempt to avoid further Taxpayer-funded bail-outs will hardly come as a surprise,  and particularly so when politicians themselves hardly exhibit anything near that type of mentality. But is this really all that the Government actually has within its power to do?

Few could actually believe the sums thrown at the rescue packages of the Banks which had effectively beached themselves through little more than acts of greed and complete disregard for anything other than maximising profit on the part of a few – all at the cost of people who have paid perhaps not just once through fees; but twice by then paying out on the losses when speculation – upon what is effectively thin air – crashed to the floor, as anything without true foundation surely would. The true wonder is how they kept the charade going for so long.

Forcing banks to ‘ringfence’ funds and therefore prevent further Government intervention through the creation of dedicated retail arms, is hardly likely to encourage a growth in benefit to domestic or small business customers. It is in fact more likely to increase the cost of basic banking services to people who already struggle to make ends meet and to those small businesses that need to be subsidised themselves, rather than to be given no option but to subsidise focussed services that banks are currently reluctant to give.

The development and provision of a an easy-to-access or ‘peoples’ bank which would provide the basic account services that everyone is entitled to access is the responsibility of Government, and should be set up as such.

Providing basic free-banking services in this way would provide Government with many advantages such as access to unfettered borrowing streams without 3rd party profit margins being included. But it could also support the administration of ‘smart’ card payments to retailers by customers, restricting the purchase of certain items by those being encouraged into work, with the added benefit of instantly losing the stigma which would be associated with payments made with a non-bank-derived payment card.

Better still, a Government-based bank run as a public service and with a customer focused culture, rather than one based upon benefits to employees and stakeholders may be able to provide many of the products which those on low incomes currently seek such as ‘payday loans’ without the utterly unrealistic levels of interest, and also provide the low-cost services and low-margin lending which new and existing small businesses need in order to survive and then thrive as we have so very long been seeking.

Creation of such a new bank – or indeed adaption of one of those that the Taxpayer already owns – would require a radical change in thinking and the type of leadership which has been sadly lacking in British politics for far too long. But it could be done.

The real question here is whether the Chancellor and the Government really want to affect change in the way that the Financial Sectors operate.

True banking reform will take a lot more effort than simply telling the banks to split their operations or even go back to employing managers within every branch.

Reform will take leadership by example and the provision of the best services possible for those who have the least money first; not by sound-biting newsworthy diktats to the financial leviathans for whom God is profit first and the interests of the very customers who keep them there come a distant second.

Is the distance created by modern communication and business methods removing basic humanity from our relationships and has the time come for a whole new set of rules?

August 1, 2012 1 comment

So what motivates you at work or within your business? Is it doing the very best job that you can; or is it simply to earn the greatest amount as quickly as possible and perhaps keep yourself in that lucrative job that you already have, maybe progressing you to an even better paying or profiled position?

Whilst admitting that it leaves a bad taste in the mouth just as soon as the realisation dawns that other people may have noticed; for a growing number today it will be the latter and for very practical reasons that they may never really have even considered at that. Perhaps strange then that it’s a feeling of guilt which often accompanies that understanding when it arrives, as few will ever argue that we would all like to earn more or have a better lifestyle if given the option to do so.

The reality is of course that people feel bad about making money when questioned, if they hadn’t realised that it has become the purest motivation or aim in what they do, rather than being the very healthy side-effect of a career undertaking or vocation, and then doing it damn well.

With a growing concern about the ethics employed within business, not least of all illustrated by the Libor scandal, one must ask if a loss of conscience is one of the very negative aspects that the distance created by increasingly elaborate supply chains and the rise of the Internet have created?

Many of us have simply adapted and in many cases thrived from the changes and opportunities brought into being by the rise of the Communication Age.  So workers within Internet and information technology reliant businesses are perhaps excusably less aware of the fallout hitting customers they may never even see from decision making which is without a tangible fear or concern for the ‘human factor’. One also wonders if they are therefore insulated from the future catastrophes they now have the power to create in what may seem little more than parallel lives, which to the more aware would only ever be dressed as distant elephants that look less than the size of a gnat on their horizon.

To perhaps emphasise the downside of distance more effectively, I will take a step back to an industry that we all love to hate. A profession that has always had the benefit of distance between business and customer once they have been commissioned; but a distance which is also created by time and process rather than by the remote contact of a broadband cable.

Within the property market, many are quick to become cynical of the inflation-setting-overpricing of houses and wonder how they find themselves unable to afford even a modest home.

Some would blame the gargantuan super-tanker that was ‘right-to-buy’ as set in motion by Margaret Thatcher, but can quickly forget how it was that very act in the first place which encouraged massive property ownership within parts of society where people would never have dared even dream of being homeowners before her tenure, and perhaps led to those very same people being able to aspire to making such dreams their reality to begin with.

Others would look perhaps more accurately to the realms of Estate Agents who have ruthlessly pushed prices up and up, month-after-month and year-after-year in order to secure greater and greater percentage based sales fees.

Estate Agents actually do a job that they could choose to do very well on sensible margins – even in a good market. But repeat custom is to them a very long game and if someone else is saying they can sell a house for more, it doesn’t take much excuse to follow or to lose out because the risks to them seem very distant indeed.

After all, very few owners will willingly lose many thousands of pounds on a sale just because one agent tells them what its actually worth, when another says different. The agent who ‘does what it says on the can’ will have ‘priced to sell’ and done what they were commissioned to do, whereas the second agent plays the long game, watching the market rise to the price they suggested, thereby getting the fee they want but paying little note of the pain that their customer experiences in the meantime. No wonder then, that so many Estate Agency businesses have stopped trading or been forced to make substantial cutbacks during the economic crisis.

The long-term effects of such business practices are potentially incalculable and one can only speculate on just how overpriced our homes now actually are, and how far back in time standards of living and subsequent social mobility could actually be pushed as a result of the out-pricing of starter homes for young people; a situation created purely on the basis of making higher and higher margins for just a few without any apparent risk to the many from doing so.

So with the rise of the Internet and information technology, many more businesses now find themselves enjoying a distance between themselves and  customers which is to such a degree that the abuse of such apparently lucrative opportunities could create all manner of future problems, which may only ever become apparent much further down the line.

For instance, a once heavily hands-on recruitment industry which only a few years ago interacted with perhaps every candidate who made the effort to post them a CV, has been replaced by one which has discovered a seemingly bombproof level of security from risk of losing fees by targeting ‘perfect fit’ or tick box candidates, simply by focusing on electronic advertising and administration techniques. 800 applications through an Internet Job Board sounds a lot to handle; but not if you have set up a machine to identify perhaps a minimum of 8 ‘keywords’ or phrases from 10 in those CV’s before the hand of a human with any kind of feeling will go anywhere near them.

Nobody talks about the longer-term threat to hiring businesses of all shapes and sizes that comes from recruiting candidates from what by default effectively becomes a closed field of applicants who only know and understand a specific discipline within business, illustrated by the use of a series of words. Words which may themselves actually just be buzzwords or the esoteric ensemble of a recent graduate.

And why in purest profitability terms should recruiters care when today’s bottom line is secure and they achieved it with the benefit of never having to even speak to perhaps 3 times as many candidates as they actually did. Candidates who may have provided the recruiter’s customer with benefits and untold added value which they never had the chance to see but paid for nonetheless.  A situation leaving perhaps the best candidates finding themselves removed from the running by a software package that reduced the time involved for the recruiter to all but a mere fraction of what they would have ‘wasted’ otherwise.

It is quite concerning that labour and cost saving technology for one business can itself create the opposite effect not just for one, but potentially many others. But then if you also look at the dark-art-creativity of the financial sector and money-making ideas such as cereal futures and funds that own shares in supermarkets and dairy processors, you can quickly begin to see just how the mechanics of distance and its ability to negatively affect the lives of many people actually are. After all, what is 1p on the price of a pint of milk every couple of days when you had a £1 Million bonus last year?

On the one hand, technical advances and the heralding of an information-based communication age encouraging openness and sharing is driving a potentially buyer-led age where businesses have no option but to sell on the basis of making ‘just enough’ profit and delivering quality on time every time.

On the other, the opening of doors to many more  ‘golden-egg’ opportunities which are great for those picking up the product as it is found, but like the ever expanding and deepening ripples from a tiny stone tossed into a still pond, can cause mayhem and disaster in places that they had never even considered.

So the question needs to be asked; Is the distance created by modern communication and business methods removing basic humanity from our relationships and has the time come for a whole new set of rules?

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