- Companies are often criticized for thinking short-term
- Compared to the constant change of ministers, boardrooms are an example of stability
- The ever-changing dramatis personae makes corporate relations more difficult
Companies are often criticised for their short-termism. But compared with the constant turnover of ministers over the past decade under the Tories and the coalition, many FTSE 100 boardrooms look like models of stability.
According to research by investment experts at AJ Bell, the average tenure of a director of a FTSE 100 company is five and a half years.
That’s considerably longer than the shelf life of most of the politicians business leaders have dealt with in recent years – and even longer than the entire term of a parliament.
Around a fifth of FTSE 100 bosses have been in office for more than a decade. The best – Simon Wolfson at Next and Pascal Soriot at AstraZeneca spring to mind – are also among the longest-serving.
This is no coincidence. Nigel Wilson, who recently retired as CEO of Legal & General after more than a decade at the top, attributed his ability to take a radical approach to investing in UK infrastructure to his confidence that he would remain in the role for a long time to come.
‘Stable’ sizes?: New government must find a way to stop constant ministerial turnover
By the time most businessmen and women reach the top, they have a lot of experience in their field.
Contrast that with politicians. As our sister paper The Mail on Sunday reported yesterday, there have been seven chancellors, eight city ministers, nine business secretaries and nine work and pensions secretaries since 2015, before Labour’s new appointments.
The ever-changing dramatis personae complicates corporate relations, requiring explanations to be made and cases to be made in a seemingly endless loop.
I visited Grant Shapps in his office in Victoria in the autumn of 2022, when he was serving as Economy Secretary for a brief four-month stint. Paintings of bewigged gentlemen by his predecessor Jacob Rees-Mogg, who served for an even shorter period of less than two months, still hung on the walls.
I hope the new government finds a way to stop this constant change. In fairness, many of those in key positions have been shadowing their roles for some time.
There have also been interesting appointments of experts such as Sir Patrick Vallance as science minister and James Timpson in prisons. As boss of the shoe repair chain he has a huge interest in rehabilitating offenders.
The downside of this approach is that ‘outsiders’ may know their subjects inside and out, but are not familiar with the dark arts of politics. But no matter how smart people are, it is madness to expect them to master a fiendishly complicated task like pensions overnight. Building relationships with civil servants, working out demands and then realizing them also takes time.
The revolving door creates constant friction and confusion. It also makes it harder to hold here-today-gone-tomorrow ministers to account. Former Tory leadership candidate Rory Stewart, who held five ministerial positions between 2015 and 2019, has spoken out against the “pass the parcel” ethos and has proposed a two-year minimum term for ministers.
The recent merry-go-round has been linked to the Tory upheavals after Brexit, but the underlying problem is deeper. People are often shuffled together, for reasons of ideology or infighting, rather than competence.
The UK subscribes to the cult of the gifted amateur in politics and much more. Labour says it will run the nation’s finances through growth. To have any chance of success, it will need constant commitment and focus from ministers, not a motley crew of characters.