Regulations that are ensuring firms are made to walk the walk
Time to end practice of empty promises
THERE’S THAT wonderful management motto of “walking the talk” where leaders are encouraged to demonstrate that they can turn their intentions into actions.
Get out there and show them that you can do it too. You hear about managers driving vans, working on the factory floor and the like. I would think many employees greet such actions with cynicism, thinking that this is mere play acting. But how do we hold leaders and companies to account to ensure that they do what they say?
Well there is a good example of where regulations help provide clarity on companies’ proposals. The Takeover Panel has a rule that is concerned with the statements made by offerors in their takeover documents. This rule resulted from the publicity from a statement made by Pfizer in 2014 regarding some long-term commitments it would make if it took over AstraZeneca.
The rule is designed to provide more clarity on statements made by parties to an offer so that any information distinguishes between: (a) a ‘post-offer undertaking’, relating to any particular course of action that the party commits to take after an offer finishes; and (b) a ‘post-offer intention statement’, relating to any particular course of action that the party intends to take after the end of an offer period.
It is a rare example of a rule or regulation that calls for a company to decide how their communication must be interpreted. It is done, in the case of an undertaking, in the knowledge that the company’s subsequent actions will be overseen by an independent assessor to ensure that the relevant undertaking is faithfully carried out.
There are many other situations where it would be good to know how certain a company is about what they intend to do. Are they saying they will do something in any event, or are they saying that they might do something if circumstances permit?
There are other non-corporate situations where this approach could create a better informed society, so that communities could, in turn make better informed judgements. For instance, political parties could set out their proposed policies in their manifestos in a clearer way if they knew that undertakings would be independently assessed. Personally I think it would be a great step forward if we knew which policy statement was an undertaking and which ones were statements of intent.
This would allow the electorate to be better able to judge the actions of any government. Perhaps manifestos would become more realistic and would consider how much could be implemented in the life of a single parliament.
I’m sure you can think of good examples where what seems to be a clear statement has unravelled quickly. As an obvious example it might have turned the Brexit debate into something more profound and meaningful if the participants had been required to differentiate between what they intended to do and what they were actually undertaking to do; in the knowledge they would be held to account. Messages on battle buses would have been very different.
In the light of the start of the new football season it would be great if ‘votes of confidence’ by boards of football clubs were distinguished between statements of undertaking and statements of intent. Currently, the world sees all such votes as being a statement of intent that last for about three games before circumstances are such the manager inevitably gets fired. A statement of undertaking by football club boards would be a very rare thing but at least words would have more meaning.
We might find ourselves in a more transparent world where statements were supported with fact rather than fake news and empty promises. Sometimes we can learn from the way companies are regulated to find a better way of doing things in other parts of our world.
Perhaps manifestos would become more realistic. Tim Ward, chief executive of The Quoted Companies Alliance
PROTESTS: Political parties would set out their proposed policies in manifestos in a clearer way if they knew that undertakings would be independently assessed.