My first grown-up job was in industrial relations in an engineering company.
After 18 months I was asked to take up a post in a Cumbrian factory where we were heading for a strike.
The Factory Manager gave me a diatribe about the unreasonableness of the unions. Shop stewards gave me bitter accounts of past management betrayals.
As the threatened strike day got closer I decided to take a risk and ignore ‘procedure’. I approached every shop steward and every manager individually and pieced together the story as seen by the two sides. The Production Manager knew I was doing this; the Factory Manager didn’t and was angry when he found out.
I heard conflicting interpretations of earlier commitments. Now I understood why the unions felt betrayed. Management had effectively made a promise which the unions saw them refusing to honour. We got into dialogue and a compromise followed.
I thought of this when I watched the evidence given to the Post Office Inquiry by Alice Perkins, Post Office Chair between 2011 and 2015. I wanted to understand how she saw her role and priorities.
Understandably she paid close attention to the priorities of her owners – the government – in preparing Post Office Limited (POL) for privatisation, and bearing down on costs. She seemed much less interested in feedback which pointed to weaknesses in the IT system, let alone the possibility that her organisation was prosecuting innocent people. While keen to follow procedure, she appeared to have little instinct for the impact on people of her organisation’s decisions.
At her introductory meeting with the auditors (EY) in 2011 she was told about the hard bargain that POL had driven with Fujitsu. EY feared that Fujitsu was trying to recover costs by compromising on quality. EY questioned the accuracy of accounting information coming from the Fujitsu IT system. EY also mentioned that some sub-postmasters accused of fraud had claimed that the system might be to blame for the discrepancies. Perkins didn’t connect these three issues or follow them up with anyone else.
This was only the beginning. There were emails and board minutes which repeatedly suggested IT weaknesses on the one hand and wrongful prosecution on the other. Most striking was the email she received in 2011 from Royal Mail chair Donald Brydon drawing her attention to alarming articles in Private Eye and Computer Weekly. Computer Weekly first published the shocking story of injustice experienced by Lee Castleton, Jo Hamilton and others in May 2009. Surely any mildly curious reader – let alone the chair of POL – would now read these and enquire how such alleged injustices had come about. Yet at every stage Perkins seemed to accept assurances by POL CEO Paula Vennells and colleagues that everything was under control.
Independent Reports were commissioned and their conclusions reassuringly explained to the board. But where was the simple instinct to hear the story as experienced by a real sub postmaster? What about talking to staff at all levels across the organisation? (Call centre staff had been instructed to tell any sub postmaster calling with a discrepancy that no-one else had had a problem). What about requesting a comparative statistical analysis on the incidence of malfeasance ‘before and after’ the introduction of Horizon. This would have shown a spectacular increase in the numbers of supposedly dishonest sub postmasters. Why?
Of course some of these options would have strayed outside ‘the usual channels’ and set a bad precedent.
And yet…. I hope, in Alice Perkins’ unenviable role I would have insisted on hearing first-hand how the problem looked to people at the sharp end. And checking that colleagues’ unanimous reassurances were not management group think.
In my induction I would have been told the organisation’s values. I would then have wanted to find out whether the conduct of the Post Office throughout had reflected those values. If so the bullying and far from impartial behaviours of the investigation team would have soon come to light.
There is a pattern here with which Alice Perkins may have been unfamiliar.
In 2002 Tomorrow’s Company published Lessons from Enron.
A story of power, fear and greed by the people at the top of the company. The non-executives who were there to hold them to account failed to restrain it.
People close to the operation knew there was much that was smelly. Brave whistle-blowers tried to draw attention to the problems but were slapped down.
In 2012 I wrote about a listed media company which operated under family control, describing pressures which,
"Led (its) journalists and executives to break the law, invade personal privacy, ignore the industry’s codes of practice and pay police for information. How much their managers then covered up this wrongdoing is still emerging."
I observed,
"Every time there is a shareholder value disaster, somewhere behind it lurks a culture of fear."
In both cases, I concluded that,
"Independent directors will only be effective if they follow what I call the “behavioural audit trail”. This means insisting first that a company states its values and second poking their noses in where they may not be welcome to ensure that the company’s managers practise what they preach."
The first case I described was Enron. The second was News Corp. Now we have the Post Office. The lessons are the same.
Sometimes you have to poke your nose in. Don’t believe everything the management tells you. Eat a meal in the staff canteen; be approachable. Read Private Eye. Become a mystery shopper.
You can’t be a decent chair or non-executive director if you show no curiosity in the face of accusations from outside and defensiveness from within.
Read Lessons from Enron. Talk to people. Follow the behavioural audit trail.
To hell with protocol, let’s be sure there isn’t an injustice here.
Mark Goyder is Founder of Tomorrow’s Company and Senior Advisor to Board Intelligence. With Ong Boon Hwee he is the author of Entrusted: stewardship for Responsible Capitalism (2020)