Learning from MP’s and their expenses

Is there anything entrepreneurs and business people can learn from the current mess over MP’s expenses?  I think there is.  I can’t believe that all of them are crooks; though I can believe that some might be.  Remember, though, that like us they are very busy people, and that we can all get into trouble if we are unlucky.  So, ignoring criminal intent, MPs probably went wrong for one of three reasons:

•  Someone else filled in their expenses; this could easily lead to a quick comment to a PA or administrator like, “Just base it on last year,” and suddenly there’s the possibility of charging for a mortgage that has already been paid off

•  Their accountants and other professional advisors read the Commons Expenses rules (and the Taxes Acts) carefully and gave them advice on how to make the most of the rules and loopholes; this would explain flipping and avoiding paying tax on capital gains – which any one of us would do (quite legally) – if we had two houses; to have the chance would be a fine thing.

•  They feel that they not very well paid and as a result a culture grew where, chatting on the Commons terrace, they learned from their colleagues what more they could claim.  This gives us some of the stranger items and the huge claims for work on mansions and estates – “If he can claim for that, I can claim for this.”

So that leads to the lessons for executives everywhere.  We have to make sure that when we delegate we do not abdicate: we are responsible for the work that people do for us, and that includes the administration of things like expenses.  We hire professional lawyers and accountants for their specialized training, knowledge and experience; but again we are still completely responsible for the decisions that arise as a result of their advice.  We need to look at it carefully and decide whether the advice they are giving is not only technically correct but also within the strategy and ethics of the way we want to run our businesses.

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Tip from Shaf – Be prepared to go into detail
When you are running your own organisation you need to stay focused on the big picture of where the business is going.  On the other hand, you also have to have enough knowledge and courage to challenge professional and technical advisers.  This may well mean that you have to get down to the nitty gritty from time to time.  Anything you learn about finance, for example, may be crucial in some decision that you have at some point to make.  The message is - don’t accept professional advice that gives you a sneaking concern that it is inconsistent with how you want to work.  Go over it carefully, get the advisers to explain anything you do not understand and then make your own decision.

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Then there’s the culture.  My attitude is for everyone to recognise that every penny the business spends needs to count.  I want people to realize that money they spend on costs and expenses is money we cannot pay out in salaries and bonuses.  That way the underlying culture promotes the aspirations of the business and of the people who work in it.

Get your people and professionals to accept accountability for reaching their objectives; but maintain responsibility for your own business.