Greggs man makes an impassioned ethics plea
Oct 7 2010 by John Hill, The Journal
BUSINESSES may get all the headlines for their bottom lines but one former chief executive is itching to see a little more humanity creep into those faceless figures.
Retired Greggs group managing director Sir Michael Darrington is proud of the success of the Newcastle company during his 24-year tenure from 1983 to 2008, which saw its share price rise from £1.35 when it was floated a year after his arrival to nearly £40 when he retired.
However, he says he is “upset” by the rapid and unwarranted increase in executive pay, as well as the lack of ethics in the way many businesses operate.
He gave his thoughts on how businesses could behave in a speech last night to the Ethics Forum, which has been established by Newcastle University Business School and the Bridge Club to increase discussion about ethics in business decisions.
Speaking to The Journal, Sir Michael said: “I can see the point in paying someone well for outstanding performance, but not the way things are going.
“Chief executive pay has quadrupled over the last 10 years, but the minimum wage has only gone up 35% and the stock market is 30% lower. When there’s a sector that’s disproportionately wealthy, it’s very divisive for a society.”
Sir Michael blames the corporate system for perpetuating this trend, and says efforts need to be increased to “enfranchise” shareholders who have invested in the company, as opposed to fund managers or a company’s remuneration committee.
He said: “These committees rarely go in and say someone is overpaid. It’s like a ratchet. Because your salary goes up the others go up as well. It’s difficult to think of a solution, but it does come down to a lack of authority for shareholders. Often it’s the fund managers that vote, but they should be finding out the general consensus.”
The Ethics Forum provides a series of free events with high-profile speakers, and Sir Michael believes it helps to bring ethics to the foreground of business discussion. He said: “There’s been too much greed and not enough thought for society as a whole. The more people talk about this, the more it’s likely to enter the mainstream.
“A number of companies try to give you the worst deal they can get away with. A lot of banks, for example, give you an awful deal and don’t tell you the full facts. I believe business ethics is about knowing the difference between right and wrong and choosing to do the right thing.
“At Greggs we had a values statement and it was part of the induction for staff. It talked about being open, honest and appreciative and treating everyone with fairness, consideration and respect. Ethics is about remembering we’re all human beings and we should treat others as we would want to be treated ourselves.”
Yesterday’s event was chaired by Newcastle University Business School’s senior lecturer in accounting and ethics Dr David Campbell.
Dr Campbell said: “The Ethics Forum is an important part of the business school’s engagement strategy. It underlines the relevance of our work to local businesses and is an exciting way to share ideas and arguments with a wider audience.”
