It was quite usual not so long ago to recruit independent trustees on the ‘nod-and-a-wink’ recommendation of a friendly pension fund professional. But not now. Several major scandals during the latter-half of the 20th century helped change the pensions landscape forever and shaped the role of the trustee that we see today.
As a consequence of these scandals – the Robert Maxwell scandal of 1991 is probably the most famous example in the UK – and companies, facing a pensions ‘black hole’ because of poorer-than-expected investment returns, being unable to pay employees what they once promised, all funds now paid into a medium or large company’s pension scheme must be held in trust.
This legal requirement not only prevents business owners helping themselves to pension scheme money whenever they want, but it also stops the pension fund counting as a business asset which might then be at risk if the company fails.
Small companies can also employ trusts to look after their pension schemes. But they don’t have to if they don’t wish it. Instead, they can choose to run a GPP, a group money-purchase personal pension scheme, which requires a pensions adviser and an administrator only and not the appointment of independent trustees.
The role of the trust is simple, to administer and protect the company pension fund and thus enable it to grow in value. It is independent of the company and the pinnacle of a triangle, with employer and employees forming the other two points.
All sides of the triangle need to work together to successfully achieve the pension fund’s primary goal, which is to ensure money moves from employee to employer pension scheme and then eventually back again to the beneficiary, the retired employee.
The job of the trustee is a demanding one at the best of times and now requires a degree of knowledge and understanding unknown in the past. The trustee can be either a lay person, a paid professional, or even a company – known as a corporate trustee. The corporate trustee will usually be the director, with the same responsibilities as an individual trustee. The pension scheme’s employer can also be the corporate trustee.
Often an individual trustee will be just one of a number of trustees looking after the pension scheme. If that is the case, the group is known as the board of trustees. Anyone is eligible to become a trustee provided they fulfil a few basic requirements.
Trustees must be aged 18 or over and be legally capable of holding property. They cannot have a conviction for an offence involving dishonesty or deception (unless it is spent) or be an undischarged bankrupt or have voluntary agreements with creditors.
Independent trustees must not be disqualified from acting as a company director, or have property in Scotland covered by a sequestration order. They cannot be a trustee if they are a company which already has one of its directors disqualified from being a trustee. The same applies with a Scottish partnership where any of the partners have been disqualified from being a trustee.
Lady Gaga is a music and business phenomenon. Simply fabulous electro pop and dance music. Strategy, marketing, finance, HR, operations, social media and so on, all rolled into one. Setting aside all the controversy over her music, fashion and so on, what might an MBA graduate learn from Lady Gaga about her approach to business? Before we start, in case you have not caught up with Lady Gaga, take a look at her ‘Edge of Glory’ video, with lyrics inspired by the death of her grandfather:
Share your thoughts on your favourite Lady Gaga song / performance by making a comment on this blog. Since she is a controversial figure, if you cannot stand her, it would also be interesting to know why.
Here are five MBA lessons that you can learn from Lady Gaga:
1. I personally love Lady Gaga’s music but it is not completely new. Her music springs from 1980’s and 1990’s electro-pop and dance music, drawing upon a range of influences, such as Bowie, Queen, Elton John, Madonna, Britney Spears and Michael Jackson. I’d add Prince to the list as I’m sure she has been influenced by the Purple Genius. Many people are creatures of habit in terms of their musical tastes and this makes Lady Gaga’s music a very acceptable diet for consumers, young and old.
MBA lesson # 1. Innovate within the familiar range of the customer’s expectation for maximum early impact. Build on that for long term sustainability.
2. If Lady Gaga’s music is in the familiar range, the presentation certainly is not. Or is it? Sure, people are shocked to see Lady Gaga attacked during her performance and then die in a pool of fake blood. But, remember Alice Cooper’s electric chair executions and Madonna’s on stage masturbation scenes for ‘Like a Virgin’ on her ‘Blond Ambition’ tour? We have been here before. The difference that Lady Gaga brings is that she has learned from all of these people and improved the packaging and presentation of the theatrical elements that accompany her music. Top business thinkers such as Tom Peters have written about becoming a learning organisation. Unlike some businesses, Lady Gaga has actually taken notice of Tom’s wisdom.
MBA lesson # 2. Stand on the shoulders of giants if you want to innovate. Be a genuine learning organisation if you want to stay in business for the long term.
3. Lady Gaga has succeeded in an age where society is questioning the profit imperative of corporations and celebrities. How has she done this? By cleverly combining the profit and purpose ambition as Daniel Pink, author of ‘A Whole New Mind’ points out. Gaga combines exceedingly clever cross branding (music, fashion, headphones and so on) with a number of social and humanitarian causes such as the Haiti earthquake, the Japanese Tsunami and various AIDS / HIV causes. This has enabled her to withstand a number of public relations crises when others would have crumbled.
MBA lesson # 3. Combine your social responsibility agenda with your business plan in a seamless way. Execute your plans with meticulous detail.
4. Lady Gaga has a shrewd approach to HR Strategy – partnering with evergreen stars such as Madonna, Elton John and Cher. This gives her access to a much wider market for her music and legitimises her brand across generations.
MBA lesson # 4. Use partnerships and joint ventures to enlarge your market share in ways that benefit all the stakeholders. Choose your partners wisely and in ways that provide genuine win-win benefits.
5. Lady Gaga has captured the hearts, minds, souls and bank balances of several generations through the clever use of social media, in ways that major corporations can only dream of. She has given her fans control of social media such as Twitter, Facebook, YouTube and so on. They have a shared identity (little monsters) and Gaga has allowed her fanbase to operate a ‘market pull’ approach to affiliation instead of using traditional ‘push’ approaches to marketing.
MBA lesson # 5. Understand that social media is social and the powerful imperative of the word YOU in social media. People like social media to interact with their own lives and values.
I’m sure there are many more MBA lessons to be drawn from Lady Gaga. Please send your thoughts in as contributions to this blog, which will be included in a sequel. In the meanwhile, here is Lady Gaga’s fantastic piece of post-modern pop music ‘Poker Face’.
p.s. My new book ‘Punk Rock People Management – A no-nonsense guide to hiring, inspiring and firing staff’ will be available shortly for FREE as a Kindle book. Please contact me directly here or via the Punk Rock People Management webpage for your copy.
What is a smart meter and exactly what is smart metering? Smart meters are units attached to businesses and homes that implement technically advanced readouts of how much electrical and gas energy is used in a specified amount of time.
First Utility is the currently the only supply providing both electricity and gas usage information. This data is then sent automatically back to the main supplier, usually within one hour or less. The data is also recorded on a daily basis, the energy supplier then adjusts credits and payments due. With smart meter electricity reading, it is all performed automatically from the unit to the supplier, without the need for an employee to come out and physically check and record the usage data. Because there is only one short burst of electricity per hour recorded and customers can view exactly how much energy they are consuming, there will be an incentive to use less and therefore saving themself money.
In the UK smart metering has been much talked about in the news. The Government announced its commitment to the delivery of smart meters. It stated that “gas and electricity smart meters would be rolled out by energy suppliers to every home in Britain by the end of 2020”. Energy suppliers guarantee that due to the elimination of meter readers the regular practice of simply estimating a customer’s use is eliminated thereby reducing the monthly bill. At a cost of £7bn, every home in Britain should be equipped within the next 9 years. There are currently over 26 million electricity and 22 million gas meters that will need smart meter installers to fit the units to them. Of course, smart meter installation will be performed by a professionally trained smart meter installer and not by the customer.
Smart metering is the wave of the future, but some have questioned whether their personal information is being kept private enough. All data is encrypted and is only visible to the customer. With an electricity smart meter, there is no more information being sent than when paper bills were mailed out to customers. Another positive is there are incentives for having a smart meter installed for example; customers can now access their utility bill and view energy usage online, get 100% accurate billings, monitor cost and never have to worry about manually reading the meter again. Also, going paperless cuts costs dramatically, which means both energy companies and customers benefit greatly.
With smart meters, energy saving and putting the control in the hands of the consumer is the wave of the future for the UK.
First Utility is an energy company with a difference. We want to help you understand your energy usage, reduce your carbon footprint and ensure you receive accurate bills.
Equifax analysis shows businesses struggling in Q2 2011, as failures across the UK increase compared to Q1 2011 and year-on-year.
According to the latest Business Failures figures from leading business information provider, Equifax, the number of businesses going bust has risen by 2.2% in Quarter 2 2011, compared to Quarter 1. In the North West business, failures have steadied, rising by just 0.2% compared to the same period last year, but compared to Q1 2011, failures dropped by 3.3%, offering further good news for the region. However, all regions need to proceed with caution, as companies across the UK struggle to survive.
The North East recorded the greatest year-on-year increase in failures in Quarter 2 at 21.7%, although when compared with Quarter 1 2011 there was a 4.3% drop in businesses going under which should be a positive sign for companies in this region.
According to the latest figures from Equifax, the East Midlands appears to be the most resilient region across the country, with a year-on-year drop in failures of 11.3%. And this strong performance is also reflected when comparing failures in Q2 with Q1 2011, with a 10.3% fall. The South East, however, appears to be facing a greater struggle. Year-on-year there was an 11.8% rise in failures and the difficult conditions do not appear to have abated when compared to Quarter 1, with a 14.9% increase.
Key Numbers
•3.4% increase in businesses failing in Quarter 2 2011 compared to the same period in 2010
2.2% increase in failures for Quarter 2 2011 compared to Quarter 1 2011
The North East sees the biggest year on year increase in companies failing
Quarter on Quarter, the South East shows the biggest rise in failures
The Retail sector records a 15.9% increase in failures Year on Year, although the Transport & Communications sector has highest Year on Year increase
“This new Report is disappointing given that the trend for more than a year has been a reduction in companies failing,” says Mark Nuttall, Director, Equifax Commercial & SME Services. “Despite failures levelling off slightly in the North West, it’s clear that some businesses have just found it impossible to continue to keep their heads above water as the economy fails to pick-up to any great extent. The failures in the Retail sector in particular would indicate the lack of consumer confidence that has been reported recently.
“However, it is also important to realise that we are now comparing figures to a steady fall in failures for the last 12-18 months, and the actual numbers of failures are still not as heavy as they were in early 2009.”
The latest report from Equifax mirrors a recent British Chambers of Commerce report, suggesting that the UK economy is recovering too slowly, with the BCC saying that more support is needed for private sector firms. Coming a few weeks after a number of high profile failures, including Jane Norman, Moben Kitchens, Dolphin Bathrooms and T J Hughes, it also reinforces that whatever the size of an organisation, focus on credit management is an absolutely crucial component for survival.
“When we took a snapshot of business failures for April/May we could see the early signs of an increase in companies failing – with a 1.5% rise year-on –year,” continues Mark Nuttall.
“Our figures support other reports showing that the UK economy continues to remain fragile, so it’s not surprising that some businesses have just found it too difficult to survive. That’s why those businesses that have survived so far need to continue operating best practice, no matter which region they are in. Now is the time to harness the power of the latest risk management solutions to minimise the threat of bad debt and secure the future of their business.
“The importance of monitoring existing customer performance cannot be over-stated to ensure businesses weather the unpredictable conditions that exist at the moment.”
Although it may seem churlish to say this, I must admit that I despair at the BBC TV series ‘The Apprentice’. This is not because of its entertainment value, but because it seems that many people believe that the programme is both educational and a reality show, in that it offers us a window into real business practice.
In particular it sends out a message to young people that, to succeed in business, you need to swear a lot, be untrustworthy, wear a designer suit and fake deference to authority by mouthing the words ‘Lord Sugar’ at every possible opportunity etc.
It is not a world of business which I recognise through over 30 years of experience on a worldwide basis. In particular the often quoted qualities of entrepreneurs, such as spirit, desire and drive are artificially exaggerated by the TV setting and the use of extrovert personalities in the main. Not all entrepreneurs choose such corrosive tactics to sell their ideas. And why all the macho aggression from the men and women on the show – are we supposed to be impressed?
Check out the number of times that Alan Sugar swears in this mashup by the infamous Cassette Boy:
Of course, we must not forget that The Apprentice is just entertainment, but it provides a message that leaders need to be arrogant, self obsessed, rude, negative and emotionally bankrupt to succeed in business. It’s a pity that the BBC don’t choose to put reality on reality TV.
I guess it would not be half as enjoyable to see people trying to collaborate, listening intently, giving people a chance to explain themselves and so on. As a replacement for wrestling on Saturday afternoons, The Apprentice is a good slapstick verbal equivalent, but frankly, and to quote Shania Twain ‘That Don’t Impress Me Much’.
I hope my kids don’t grow up thinking that this is the best that UK Business has to offer the world. I’m going to kick my Amstrad now!
Peter Cook is the Rock’n’Roll Business Guru, delivering exceptional corporate events and keynote speeches that blend business and music.
