Terry Murden: Agency's new leader must rekindle the spirit of enterprise

Published on Saturday 30 May 2009 14:29

MAYBE he decided to quit while he was ahead. Or should that be, while he was not on the back foot?

Jack Perry's resignation as chief executive of Scottish Enterprise came with no warning on Friday accompanied by a statement that he felt it was time to return to the private sector. He will leave later this year, on his own terms and with no indication that there was anything other than a personal desire to move on.

Of course, SE is going through a quiet spell just now, enjoying a lengthy period of virtual anonymity while the banks and car industries fight for survival and the rest of us cope with recession. Perry may have decided that this was just the time to start packing his bags.

The important questions, apart from who succeeds him, are what Perry leaves behind and whether he fulfilled his own and the country's ambitions during his five-year tenure. The job losses announced by Hewlett-Packard together with a bleak report on the Scottish economy's prospects from the government's chief economic adviser Andrew Goudie would be sufficient reason for him to wonder if it was time for someone else to come up with the answers.

SE is slimmer – half the number employed than when Perry arrived – and its budget inevitably smaller, but 320 million is still a lot of resource to splash around and there remain questions about whether the taxpayer is getting enough of a return.

The wider macro-economic problems are a worry. Output is sluggish and falling. The financial services which once made up for other declining sectors of the economy are now reeling from their own self-inflicted crises.

Perry's remodelled, more tightly focused SE has broad support, though critics justifiably ask what it really stands for. There is little wrong with the inward investment record, yet few of us can point to many big successes. New business creation remains a particularly Scottish problem.

While there was little it could do about the wider global economic and banking issues, the agency has hardly been at the forefront of the battle against recession. I asked Perry if the agency had faded from view. "If you are asking whether we're off the front pages, then I see that as no bad thing," he said.

Well, to a point. It would be nice to think our 320m a year agency made it on to the front pages now and again for doing something positive. Too often it has made a splash for getting its finances in a muddle, for a series of resignations among highly paid research executives or spending too long restructuring itself rather than fixing the economy. It has been too defensive and not sufficiently pro-active in taking up the challenges facing the economy.

For all that, Perry has created an agency that is suitably leaner for our times and has the balance of opinion broadly in its favour. But what it needs is a new agenda for growth, a greater visibility. Perry, a former partner at Ernst & Young, never put his own ego before the greater good, but sometimes it is necessary to show a little bombast and attitude, as he did in the early days when he demanded SE be relieved of its responsibilities for individual career development and the "rehabilitation of drug addicts".

A new leader will have to find answers to the problems that evaded Perry and his predecessors. In his memo to staff he said SE was now "fit for purpose", but his successor needs to find one and inject a new spirit of enterprise that will allow it to live up to its name.

Shareholders watch over bank bonuses

IT will be back to banker-bashing on Friday when the board of Lloyds tries to appease shareholders demanding chairman Sir Victor Blank should not be re-elected. He has already agreed to go next year.

There is also the contentious issue of remuneration, known in banking circles as shed loads of cash. Lloyds has agreed to curtail the maximum pay-out proposed in its long term incentive plan for directors, originally 375 per cent of salary and now reduced to a mere 200 per cent. Of course, they have to meet targets over three years and the bonuses will be paid in shares.

But this revised scheme is still opposed by some shareholders who will try to vote it down, though it is not likely to match the level of opposition meted out to directors of Royal Dutch Shell and in any case it will be backed by UK Financial Investments, the body that looks after the taxpayers' 43 per cent holding in Lloyds.

Even so, shareholders are clearly getting the bit between their teeth over the way directors' salary packages are cosily agreed. Greater shareholder input and caveats on when rewards kick in would be a welcome change.