Business Column: Startling leadership contrasts in the private and public sectors

Secretary of State for Health, Jeremy Hunt.
Secretary of State for Health, Jeremy Hunt.

The two big talking points in the business news this week were the hostile bid from Kraft Heinz on Unilever, so I decided to use this event as an opportunity to explore leadership in the private and public sectors.

However, after I had drafted my copy of why this was a bad thing for Unilever and how mercenary Kraft, Buffett and Lehman were, and how we needed to protest as a nation the deal collapsed! Kraft and company walked away.

Just why are our politicians so bad for our public sector organisations, especially the NHS?

This is mainly due to Unilever’s CEO, Paul Polman, who stiff-armed the marauders instantly, saying that the deal had neither financial nor strategic merit. They had not expected such firm resistance, and retreated.

Although frustrated at my wasted work I also felt a sense of relief because Unilever is one of the few corporate giants working at being an admirable world citizen. Mr Polman is one of the main reasons.

His mission: “As CEO of Unilever, my personal mission is to galvanize our company to be an effective force for good”, and purposefulness. He announced in 2010 his aim to double Unilever’s sales to over £50million a year, while halving the group’s footprint. Many shareholders had concerns.

He was blunt: “We are not working for our shareholders. We are working for the consumer.

“We are focused and the shareholder gets rewarded.”

He also ditched quarterly shareholder reports, saying he did not believe in the quarterly “rat-races”.

Yet, by July 2016, half-yearly sales were up to £22 billion, with the high margin goods leading growth.

Costs have been reduced, thanks to savings on energy, waste and time in factories and since 2008 eco-production has helped save €600 million (£500m).

Sustainability: As to the group’s footprint, just over five years in, Unilever is on track to meet its aims, which included helping more than a billion people take action to improve their health and wellbeing by 2020 and halving the environmental impact of its products by 2030.

This is not something your average hedge-funder values. But the millennials, the dominant generation, do.

Nearly 70 per cent stated that they would look at the sustainability and ethical practices first of any company they may be thinking of joining. Unilever qualifies.

Paul Polman demonstrates real leadership, strategically, and in the brief takeover crisis.

Would that Health Secretary Jeremy showed this level of leadership! He has disappeared just as the NHS goes through a long and predictable meltdown, much caused by his meddling and the on-going privatisation.

Just why are our politicians so bad for our public sector organisations, especially the NHS?

One reason is that civil servants are bright enough to make even the most outrageous decisions look workable – for a time. Then, when things fall apart, as in the Prison Service, Education and the NHS, the implementers got the blame, not the policy makers.

If the acute care workers, ie hospital staff, in particular, were not so smart, hardworking and resourceful then Jeremy Hunt’s policies would have been shown up for the dross they are sooner.

The question is, apart from the sheer arrogant incompetence of politicians like Hunt in health, Gove in education and Grayling in justice, education and transport (!), what lies at the root of the problems?

The Government uses the wrong organisational model. Their mental models, as Senge puts it, are flawed.

Instead of using large enlightened companies like Unilever or John Lewis, or Aviva as their models they seem to have gone to those extreme capitalist corporations who used “command and control” as their management style, such as GE under Jack Welch and Microsoft under Steve Balmer, where employees lived in fear and uncertainty.

It seems as though they made a dish of the worst ingredients from these firms, and called it New Public Management.

Why would the politicians relish such a dish? Because it is all about “being in charge”. Politicians cannot bring themselves to trust anyone.

That is the nature of politics; so, when some large consultancy introduces the command and control management system you swallow it – the country pays the price.

In the NHS these policies demonstrate the dedicated doctors and nurses are not really trusted, and so have to be measured and incentivised by using cost cutting to reducing costs (instead of driving out waste); arbitrary targets (four-hour A&E) as a good way of improving performance, and a variety of regulators to monitor performance.

Oh, and then just for good measure, blame and shame the organisations by public ratings – and then don’t invest enough, so that there are never enough resources. They have cut 15,000 beds in six years.

Then, just for good measure, when the NHS is on its knees, introduce a massive reorganisation called Sustainability and Transformation Plans, to cost £10 billion.

These will take everyone’s eye off the real problem, the utter neglect of social care, where much of the unnecessary demand and cost is generated.

In good businesses like Unilever this is called “prevention”, the first step in really productive work.

But for politicians like Hunt, this reduces the opportunity to be seen to be in charge of the third largest national organisation in the world – which he is demonstrably not.