In 2016, we continued our journey towards greater diversity by increasing the proportion of female employees in the Group to 37.8 per cent (2015: 36.9 per cent) and the proportion of females in senior leadership roles was unchanged at 18 per cent. We have also launched our Diversity Strategy which sets out our corporate goals and introduces the concept of a Diversity Council in the UK that will represent all strands of diversity.
Target: Continue to drive greater (gender) diversity in our
Our ‘unconscious bias’ training tackles diversity in
recruitment, and our award-winning ‘affinity networks’ (all started by our employees) have generated new thinking, including the launch of ‘Connect’ – our Lesbian, Gay, Bisexual and Transgender network.
Approaching graduate recruitment differently in 2016, we focused on behaviours instead of experience or qualifications, resulting in 70 applicants with the highest degree of gender and ethnic diversity to date.
Does this sound like a company whose core focus is on making a profit through getting the job done properly? As bobby b says, all this does is flag up a potential opportunity to short the company’s stock.
Bardon and David Moore weigh in on Carillion’s policy of not paying subcontractors in a timely manner:
My experience of UK construction payments was the average payment was received around 110 days after invoice. Carillion had a reputation as one of the worst payers, 180-200 days. A large part of their cashflow was generated by arbitraging between quick government payments and screwing contractors with long, long payment terms from what I understand.
Carillion liked to present themselves as a construction and support services business, but as I said in my previous post, it is likely they subcontracted the delivery of anything useful with Carillion themselves simply “managing” the process. But as David’s comment implies, they were less a construction company than a dodgy middleman who got themselves into a favoured position with government mandarins and made some percentage of their money through financial trickery which shafts those doing useful work. The money they made then got ploughed into corporate-level vanity projects, empire building, paper-shuffling, and virtue-signaling guff like Diversity Councils.
I suspect what I’ve described above could apply to many, many corporations with household names: they don’t actually do what they say they do, and what they actually do is engage in rent-seeking, pointless bureaucracy, and virtue-signaling, all of which is paid for using unsustainable and highly questionable financial practices. Hector Drummond provided a link to a good post on Carillion over at Raedwald’s blog (the whole post is worth reading, and the comments):
Balfour Beatty must be breathing a sigh of relief this morning that Carillion’s recent takeover bid was not successful. BB was lined up to follow Mowlem, McAlpine and Eaga to boost Carillion’s sales and potential profits in a process that only works so long as there are more companies with which to merge or take-over; once the music stops, the whole thing generally collapses.
Carillion was overburdened with debt and major construction contracts were simply not providing the profits to service them. This was disguised for a while by accounting for ‘other receivables’ i.e. money expected to be released from construction contracts, but never materialising. And this is a tale that is common throughout the construction industry.
I’ve written before about a future in which the brightest young folk will work in small 2-3 man teams feeding off the carcasses of bloated corporations harvesting legacy rents, and I think the example of Carillion only reinforces my belief. But as Bardon points out, those who will suffer the most from Carillion’s demise are those very same small companies who have performed good work in the expectation of pay which now they will never see. If these guys are going to succeed in future, they need to insist on better payment terms or learn to walk away from, or off, a job.
The payment of subcontractors is always a sore point on major projects. Back when I lived in Manchester I worked with an ex-BAe chap, and he told me his former employer was notorious for sending small suppliers into bankruptcy through not paying invoices. They didn’t do it on purpose, they just had a ludicrously slow and bureaucratic invoice processing system and sometimes it would take months or years to make the payments. For a small company on a tight cashflow with no reserves, timely payments are crucial, but the bureaucrats in BAe simply didn’t care.
In the oil and gas business, Korean companies are notoriously bad at paying their suppliers, often having no intention of doing so from the outset. I used to get the impression a Korean project manager thinks he’s done a good job if his suppliers are all bankrupt, negating the need to pay them. The more sensible oil companies take a dim view of this, realising that bankruptcies in the supply chain will ultimately hit them. I’ve even seen some clients go as far as guaranteeing the payments of subcontractors working under Korean EPC companies, but more usually they just shrug and say “nothing to do with us”.
Which is an interesting approach, firstly given how much it will ultimately bite them on the arse, and secondly from an ethics point of view. Somebody ought to be making more noise about the fact that the British government was happy to award contracts worth billions to Carillion, no doubt impressed by their diversity policies and office waste paper recycling initiatives, but wholly unconcerned that not paying their suppliers in a timely manner was standard practice.
Also in the comments was this from Andy in Japan:
One of the (many) reasons I consider myself to be an ex-libertarian is they ‘everything private good, everything state run bad’ mentality…it doesn’t matter anymore if it is a state of private run, the problem is the uselessness of British Management.
I agree with this: eventually any large organisation, unless ruthlessly led from a CEO who never loses focus, falls victim to basic human nature. It’s what I meant in my previous post when I said:
When mass-subcontracting…you need to be careful you’re not just replicating the problems of government-run bodies further down the contracting chain.
As the commenters under Raedwald’s post said:
One of the problems of the Civil Service, from personal experience, is that they will not take any risk that might rebound on the individual involved and thus they always tend to go to the biggest companies on the basis that “if it all goes pear shaped, we can’t be blamed as we went to the biggest company in the business”.
In the industry I worked in for a chunk of my working life the arse-covering was “No-one ever got fired for buying IBM”. I dare say every business sector has its own version.
The “biggest company in the business” is likely to be the most corrupt and worst managed. The larger an organisation, the more difficult it is to manage.
Government’s subcontracting services to the private sector doesn’t improve much if everyone is engaged in the same arse-covering as they were when it was done in-house.
Finally, also from Raedwald’s comments:
Are the board experts in m&a or construction.
If m&a, what are they doing at a construction firm?
If construction, why are they trying to run serial mergers?
They’re good questions. The only one I have left is how typical is Carillion of most of these giants of industry and commerce whose corporate brands are ubiquitous? I’d say there are an awful lot like Carillion, and worse.