Other People’s Money

I have just been reading yesterday’s Mail On Sunday about the extraordinary expenses claimsof former JJB Sports chief Chris Ronnie, which recall the worst excesses of disgraced US CEOs such as Bernie Ebbers of Worldcom.Most of the expenses mentioned in the report from top accountants Deloitte referred to planes and helicopters but coming hot on the heels of the lurid stories of expenses claims by MPs, BBC executives using public money to shower its highly paid talent with gifts and dinners and the current focus on the revival of the lavish salary and bonus culture that permeates the City, it is easy to take the view that our leaders, be they public sector or private sector are seized by an extraordinary level of greed the moment they get the keys to the executive bathroom.

And yet are those of us that make up the lower reaches of the scale untainted by all of this? Fiddling expenses is sadly not uncommon within the work environment, and even those of us that would never dream of being dishonest will invariably make the most of any opportunity to help ourselves if our employers are paying. The temptation to enjoy the benefits of other people’s money remains strong.

Even owner managers, who are the closest to business people who actually do spend their own money, are not immune from such temptations, particularly when you consider that much of their funding comes from third party creditors and funders, such as banks, and that many such owners have difficulty distinguishing between the company’s funds and their own.

Actually what we are seeing here is what can be termed as a warped sense of entitlement, often borne of resentment at inadequate pay and rations or some other perceived employer slight. The inner justification of “I deserve it. It is my money really” is what drives this desire to maximise the use of other people’s money. In the case of the MPs, it was their view that their pay was not commensurate with their status and therefore it was right to use their generously lax expenses system to supplement it. In the case of Chris Ronnie, it was “I am important and therefore it is right that the company spends this money on me” and in the case of the average employee it is often “they don’t care about me so I will take them for everything I can get”.

I am not sure if we will ever reach a stage where people treat business expenditure in the way they treat the money that they have to shake out of their own personal piggy banks, but maybe the key to reducing this sense of entitlement, apart from implementing strong financial controls (including in the case of senior executives a robust non executive presence) and creating awareness of the fact that excessive use of other people’s money is plain wrong, is to make them feel more valued in the first place.

A battle the optimists have to win

We received an e-mail this morning from the Birmingham Chamber of Commerce seeking member views on a new BBC documentary “Recession Britain”. The aim of the programme is focus on one firm that is struggling to survive the recession and how that struggle will impact on their supply chain, particularly the smaller firms that are part of it.

My immediate thought was why don't they follow it up with a programme on businesses that are actually doing well at the moment? There are more of these businesses around than people might think, and such a programme would provide encouragement for struggling and nervous businesses, rather than their proposed programme which will surely just exacerbate the situation.

People are more positive than is generally recognised in the media at present (witness today’s figures on consumer confidence which show an improvement since January), something that was reconfirmed at a breakfast seminar I attended organised by the accountants Smith and Williamson. Two well known names in the entrepreneurial world, Guy Rigby, Head Of Entrepreneurs at SandW and an old friend of Orchard, and Mike Southon, founder of the Beermat series of entrepreneur guides and regular FT columnist, combined in an entertaining double act to emphasise that there are always reasons to be optimistic as long as the basics of good management are adhered to.

Admittedly their optimism was tempered by a more pessimistic (or realistic? - take your pick) view from Mark Garnett, Director of Financial Services at SandW about the state of the British economy and its future prospects. OK we know it is not fun out there, and it seems that the BBC and other media take every opportunity to remind us of this. However we also all know deep down that the current economic battle is one that the optimists have to win.