Should we fire our CEOs first?

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In order to save over £80,000 a year, Pendle Borough Council has decided to destroy its CEO. The man in charge of the Council, Stephen Barnes, is being made redundant and nobody is going to take up his title again. It’s a brave move, trying to streamline an organisation from the top down rather than the usual way of ‘restructuring’ the base of the hierarchy first, and probably the best move Pendle Council could have made. Other local councils and companies, however, are now considering the same course of action. They should be reminded that Pendle was a special case, and these other bodies are not nearly as likely to ‘trim the fat’ as they are to decapitate themselves.

To most people, the abolition of a generously paid administrative job at the head of an organisation sounds like the start of a workers’ revolution. Yes, the decision was quite out of the ordinary, particularly for a council run by Conservatives and Liberal Democrats; and yes, Barnes was a controversial figure in local government, having worked for the Council since the Local Government Act 1974 but also having one year given himself a pay rise of 10.3%, when everyone else had to make do with 1.9%. But the decision was a rational one. The post was up for review in April, the Council has to find vast savings within a few years, and Barnes was prepared to resign early.

On top of this, Pendle Borough Council is just the sort of organisation that can cut down on administration. It’s not huge as far as district councils go, with just under 90,000 inhabitants. Plus, the role of CEO isn’t particularly important to them, mainly acting as the face of the Council for outside organisations (and other CEOs). Therefore, the Council can easily divide his responsibilities among two, more modestly paid senior positions – a strategic director and a corporate director. Pendle is also part of two-tier local authority, which means that crucial policies like education and transport do not come under their remit. What remains for the borough council is largely being delegated to Pendle’s 19 parish councils, including responsibility for public toilets and festivities.

The North West Employers Organisation and Councillor Mohammed Iqbal have both confirmed that other groups are now thinking of copying Pendle’s strategy. However, although Pendle can quickly overthrow their administration, not every organisation is so lucky. Larger councils and unitary authorities have much more responsibility, which requires more than a few hundred workers and just one main partner company. For these councils, management is crucial, and capable managers don’t come cheap. Barnes himself could have earned double his local government salary by moving to the private sector.

Local companies are most at risk. The temptation to ‘downsize’ your boss can be great. There are a lot of workers who have had to pack their things because their job was being deleted or merged, and even more who just hate their supervisors anyway. Boards of directors, or whoever is in charge of picking a company’s CEO, may also be drawn to the idea of destroying their leaders as a kind of PR stunt. Then they could claim to be innovative and more egalitarian than the average company in Lancashire. But organisations of every kind must seriously consider what their CEO does before they try to show them the door. Barnes was just an intermediary, but some chiefs are ultimately accountable for just about everything a company does. Pendle Council has not discovered a panacea.

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Daniel Snape

Daniel was an undergraduate in Philosophy, Politics, and Economics at Lancaster University and Comment Editor at SCAN.

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