Will Liberal Democrats support a ‘middle way’ for higher education funding?

Vince Cable is a man with an increasing talent for controversy. His comments at Lib Dem conference regarding financial services produced a storm of media attention and predictable levels of controversy. But it was his statement on university funding in a fringe event that should have caught the eye. Cable seemed to make an important concession to his Conservative Coalition partners when he announced that a graduate tax would be “unworkable”. Cable’s statement came with the qualification that the essence of the idea, that graduate payments should be linked to earnings, was a “red line” on negotiations with the Conservative party. But it ignored the passing of a motion at conference which called for the party to explore the option of such a tax. The Times Higher Education covered the announcement.

While party members may feel some confusion over the party’s position, this should represent better news for the higher education sector. There were always likely to be a number of practical obstacles to a straight replacement of tuition fees with a graduate tax – will it break the link between the cost and value of a degree, discouraging competition? What is the definition of a graduate? How will money be allocated to individual institutions if stored centrally? And when will these institutions see this funding? Cable’s announcement appears to quash any chances of a full blown graduate tax replacement.

Although clearly not a complete climb-down, this does pave the way for a ‘middle way’ between the proposed raising of tuition fees and the development of a graduate tax. Director of Policy Exchange, Neil O’Brien, recently wrote an excellent account of what this may look like. Cable’s comments may well demonstrate a gradual edging towards this position, a more sensible extension of the tuition fees regime which would result in higher earning graduates continuing to pay fees past the total cost of their degree, to an agreed fixed limit. This would provide the fairness Cable and party colleagues such as Simon Hughes wish to pursue and could be a more palatable pill for the party faithful to swallow as an alternative to a straight increase in tuition fees.

Creases would undoubtedly need to be ironed out, but as an alternative to a graduate tax this would no doubt also be a huge relief to the higher education sector.

John Hood - Consultant
http://www.linstockcommunications.com/

Lib Dem conference: Benefits, bridge-building and bonus bashing

The Liberal Democrats kicked off 2010 conference season with a strange mixture of delegate disapproval and subdued support. With the party in government for the first time in over 60 years, media scrutiny and security were both tightened. Commentators waiting in the wings to interview irate members and report on political gaffes and rebellion were largely left frustrated and although there were sporadic incidents of disharmony, there did not appear to be any appetite for all out opposition to the Coalition or to the party leadership.

Nick Clegg’s opening speech, described by Nick Robinson as ‘largely defensive’ received a luke-warm response from the floor. His statement that spending cuts were not ideological did little to allay member fears, particularly regarding planned cuts to benefits. Indeed, many members made their reservations felt throughout the next day. In essence it was a speech that recognised that triumphalism would be an inappropriate tone given the difficult decisions ahead. But in looking to soothe member anger, it failed to reach audiences beyond the conference floor.

Given the party’s and Nick Clegg’s poll ratings, shoring up the grassroots vote may need to be abandoned in the near future for a more ambitious approach targeting wider audiences, if the Lib Dems are to profit from the Coalition.

Secretary of State for Energy and Climate Change, Chris Huhne, produced a more warmly received speech, and in many ways helped to prevent a maudlin atmosphere developing. This, of course, was safe ground for the Lib Dems, long supporters of the green agenda. But as someone who has often failed to inspire at speech time, this was as much a personal triumph for Huhne as it was for the party. A strident tone that focused on championing consumer rights in the face of rises in energy prices allowed Huhne to push past the difficult question of nuclear power, an obvious stumbling block. By the end of his speech, there was a palpable sense of relief among members, here was a man who understood their concerns and wouldn’t be cowed by Conservative interests.

Of course, this was far from the being the most populist speech of conference. Vince Cable’s speech, leaked in advance, provided the sound-bite of the conference, as he announced "I am shining a harsh light into the murky world of corporate behaviour". Predictably the business world bristled while party members swayed to the theme of perverse bonuses and greedy bankers. Of course, the speech was somewhat more nuanced than this, but it hardly mattered. Cable’s anti-capitalist credentials had seemingly been confirmed, much to media delight, finally the conference’s headline had written itself.

While the confrontational approach was undoubtedly deliberate, so too were the relatively vague promises that accompanied it, recognition perhaps that financial services regulation is not an area to be tackled without Conservative support. While many commentators saw Cable’s comments as a rebellion against Conservative control of economic policy, others saw a more considered approach, possibly endorsed by Conservative HQ. A round of emotive bank bashing helped to demonstrate political autonomy and convince members that the party’s soul had not be subsumed within the Coalition. The wider public meanwhile were given the news they wanted to hear, that behavioural change would be forced upon banks. For the Conservatives meanwhile, a reputation for being business-friendly, economic heavyweights was largely retained as they floated above the debate. Naturally, long-term implications of such an agreed approach would be difficult to predict, but in the short-term, it seems to serve the interests of both parties. How this pans out during the Conservative conference will be of particular interest.

In many senses, this Lib Dem conference failed to spark. There were no real dust ups, and potential points of division both within the party and between the Coalition partners were largely averted. Although Vince Cable’s speech undoubtedly generated a lot of heat, it perhaps generated less light, and the long-term implications do not seem as damaging as first suspected. Despite this, conference undoubtedly had a sombre feel to it and the party is clearly still coming to terms with no longer being political outsiders. It is also clear that the real challenges for the party remain in the coming months. Members who voted against academies and free schools and who vehemently oppose cuts to benefits may well find that this no longer counts for much if Lib Dem policies are rejected in favour of Conservative ones. Managing the fallout from the painful decisions made in the Comprehensive Spending Review (CSR) will no doubt be first on the Lib Dem leadership’s ‘to do’ list.


John Hood - Linstock Consultant
http://www.linstockcommunications.com/

Diversity in the Workplace

As seen on the The Works

Despite the recent media coverage and research highlighting that the PR industry could be doing more to value background diversity, we admit, we were shocked by our survey findings. We were left wondering how to remedy this gross under-representation of BME candidates within the profession? Given that the combined spending power of BME groups is expected to exceed 300 billion in 2011, when it is estimated they will make up 15% of the UK's population, PR teams need to better understand how to engage with this audience.

We asked some of the leading diversity campaigners, Bieneosa Ebite, (Managing Director of Bright Star Public Relations and Chair of Ignite, a network that promotes cultural diversity) and Ashnoor Pardhan, (Consultant at Linstock Communications and currently leading the campaign to encourage BME audiences to respond to the 2011 Census) their advice.

The following is a summary of their key points. For a full, unedited version, please click here.

Q1. "Why is the PR industry lagging behind with ethnic diversity compared to other industries?"

BE: "The PR industry is one of many industries that have a lot of ground to cover to ensure that its workforce is reflective of the UK's demographic profile. I have been working in PR for over 10 years and during this time there has not been a genuine acknowledgement of the diversity gap that exits when it comes to ethnic diversity, or the desire to undertake long-lasting action to help improve the situation. Until something is acknowledged as an issue, it remains 'hidden' and does not have any place on the agenda of those that have the power to change the status quo...Since Ignite's inception in 2009, we have been campaigning to put cultural diversity on the agenda of those that have the power to influence and change things within the industry. We are now starting to see that PR industry bodies, agencies and some recruiters are acknowledging that there is issue. The next steps need to be about taking tangible action for long-term change".

AP: "PR has a reputation for being somewhat elitist and this certainly puts people from ethnic minority backgrounds off the industry - ironically we're suffering our own PR problem. As such the number of consultants from ethnic backgrounds is significantly underweight when compared to society as a whole".

Q2. "How should we combat it?"

AP: Both as a profession and as individual companies. As a profession we need to do more to break down the barriers, perceived or otherwise, and encourage people from ethnic backgrounds to consider PR as an attractive career option. The CIPR and PRCA are starting to do more work in this area on all of our behalf. Additionally, companies need to be proactive in this area; embrace the talent on offer and the commercial opportunity. At Linstock we engage with Universities and offer internships, as well as engaging with and supporting organisations such as Ignite.

BE: "There are a number of steps that we can take to enhance diversity in PR: through education and buy-in; recruitment; promotion of the industry; monitoring and policy setting and increasing the visibility of senior practitioners from diverse backgrounds."

Q3. "How effectively can an agency reach diverse audiences if their workforce isn't diverse?"

BE: "Having a diverse workforce, one that is incorporates all of the 'special characteristics', brings a number of benefits. Diversity enables agencies to enhance their ability to communicate effectively with a range of audiencesPR teams that reflect this diversity will have a better understanding of how to engage with this audience. As well as the increasing levels of diversity in the UK, we must not forget that top companies from rapidly developing economies are going global fast. PR agencies must understand their need for a PR strategy that takes account of multi-cultural sensitivities in different markets, which will be vital for their success".

AP: "I think that to reach this audience effectively you need to employ people from these communities. At Linstock we offer clients a real understanding of ethnic audiences and how to engage them - we can only do this because we employ and work with people from these communities who understand the culture and sensitivities. Consultancies need to recognise that a diverse workforce can bring a unique cultural intelligence and knowledge to an agency... The audience also represents a significant commercial opportunity, but only to those who know how to engage them".


Ashnoor Padharn - Linstock Consultant
Bieneosa Ebite - Linstock Associate
http://www.linstockcommunications.com/

Mergers and Acquisitions: A Confidence Trick?

The recent upsurge in mergers and acquisitions flies in the face of strong evidence showing that key decision makers’ are tricked into underestimating the risks to shareholder value and profit by their own overconfidence about the likelihood of success.

In August there was a surge in mergers and acquisitions activity (e.g. BHP Billiton’s bid for Potash, Intel’s for McAfee). Thompsons Reuters’ data show nearly $90 billion worth of deals in one week alone, making it the largest weekly total for 4 years. This activity flies in the face of evidence showing a surprising lack of success e.g. simply announcing merger bids wiped off over $220 billion from the share price of acquiring companies over the period 1980 – 2001 (Moeller, Schlingemann, and Stulz, 2005); at best there is only a 50/50 chance of success (McGee, Thomas and Wilson, 2005). In any other context these chances would be considered far too risky. So why do CEOs and organisations do it?

Evidence suggests that key decision makers are blinded by overconfidence, leading them to over-estimate their own chances of success. They know that many other organisations have failed but are confident about their own chances of making it work.  However, research shows that they are, in fact, overconfident and just as likely to fail as other organisations. This overconfidence is due to the short-cuts in thinking (heuristics) decision makers use when faced with complex decisions. These short cuts are very useful because they make complicated problems simpler and easier to resolve. However, when simplifying in this way crucial information is neglected and this usually reduces the accuracy or appropriateness of the solution.

One important simplification strategy used by decision makers is confirmation thinking - a strong tendency to focus on information that supports an existing belief and ignore information that challenges it. This leads to a number of biases:
•    Overconfidence – people hold beliefs with higher degree of confidence than they should because they fail to take account of the information challenging this belief. Research shows that CEO overconfidence is a major factor determining mergers and acquisitions – those initiating these activities are much more confident of success as compared with external experts and analysts and this level of confidence is much higher than the actual likelihood of success.
•    Optimism – allied to overconfidence; decision makers have a general tendency to believe that, in comparisons to people similar to themselves, good things are more likely to occur to them and that bad things are less likely to occur.
These factors mean that CEO judgements of success of mergers and acquisitions are overly optimistic and downside risks overlooked so not addressed.

Can anything be done to rectify this situation and help CEOs and organisations make less biased decisions? Research shows that there are three ways of overcoming this problem:
•    Better governance: evidence shows there is more merger and acquisition activity when CEOs also act as president and chairman of the board (Malmendier & Tate, 2008); this highlights the crucial role of weak oversight by boards of directors and the need for better governance.
•    Train key decision makers to think smarter:  people can be taught to think in ways that reduce overconfidence.
•    Better decision making processes e.g. use of techniques such as devil’s advocacy, since these guide the process in ways that minimise bias.

Professor A John Maule
Director: Centre for Decision Research, Leeds University Business School
Linstock Communications Associate 
www.linstockcommunications.com

Nudging back in vogue

As seen in the Independent 16 August 2010

The Government has reportedly set up a behavioural insight team at No 10, heralding the return of Nudge as a key policy driver. Andy McSmith’s article in The Independent last week provides an excellent summary of the principles of nudge theory. What it and the original work of Thaler and Sunstein underestimate, however, are the controversies and inconsistencies in the academic research on which these ideas are based.

For example, one key ‘nudging’ principle is to make the ‘desired’ activity the default on the assumption that people are much more likely to stick with this than change. This ‘nudge’ can provide the basis for encouraging people to sign up for organ donation or pensions – in each case the public may be automatically opted in, so must opt out if they don’t wish to be involved in these activities. Research shows that initial uptake is enhanced under these conditions.

However, this idea overlooks other key principles of human decision making that may modify or even nullify this ‘nudge’. For example, when people are actively involved in making a decision they are more committed to it and will stick to it longer, even when the outcomes are not as good as expected. This shows that being involved in the decision is vital in sustaining commitment to the action over time. ‘Nudged’ decisions are associated with less commitment so people will give up on them more readily when the outcomes are disappointing.

So ‘nudging’ people may be effective in the short term. However, in the longer term it may be less effective, particularly in situations where people are likely to experience a mixture of both positive and negative outcomes. Since longer term change is usually the primary objective, we may be better encouraging active involvement rather than a ‘nudge’.

Professor A John Maule
Director: Centre for Decision Research, Leeds University Business School
Linstock Communications Associate
http://www.linstockcommunications.com/

 

World Cup woes and calamity comms

The English and French football squads are clearly not happy and harmonious places right now. The sending home of French striker Nicolas Anelka for arguing with coach Raymond Domenech was swiftly followed by John Terry’s ill-advised press conference, in which he revealed details of imminent ‘clear-the-air’ talks between the England squad and manager Fabio Capello. While both represented a boon for the national press, they also highlighted complete failures of communications.

A recognised characteristic of Capello’s career has been the autocratic nature of his managerial style. In many senses, his no-nonsense style can be seen as a positive, providing as it does clarity for those who play under him. However, when it comes to communications, it can cause problems. Successful external communications rely upon strong internal communications. While it is not always possible to have everyone buy into the same message or pull in the same direction, internal communications need to aim to achieve this.

First and foremost, there must be dialogue. This doesn’t need to be constant, but it does need to involve structures being put in place that allow people to voice their concerns internally. Capello’s stubborn refusal to acknowledge this has arguably breeded a damaging inflexibility. Instead of effective internal communications providing a pressure valve for players, matters were brought to a head with a damaging and very public show of division within the camp.

However, flexibility, although important, must be checked by a structural balance. The flip side of a rigid internal communications system is the fiasco that has engulfed Les bleus. In the French camp player power trumps all, so much so that the French Football Federation’s managing director, Jean-Louis Valentin, resigned in light of player protests. This, obviously, is the other less favourable end of the spectrum and only perpetuates the point that flexibility and structure are not mutually exclusive.

The best laid communications strategies can be undermined by rogue voices of dissent. By failing to build structures to encourage effective and harmonious internal communications, both England and France camps have paid with poor external communications and the negative press coverage and public opprobrium that often follow.

John Hood and Jay McGregor - Linstock Consultants

www.linstockcommunications.com

Stay of execution offers RDAs a chance to demonstrate their clarity of purpose - as seen in June 2010 issue of NewStart magazine

For Regional Development Agencies (RDAs) hamstrung by the political uncertainty of the last 18 months, the Chancellor's first statement on spending cuts must have been relief of sorts.  In-year cuts of £270 million are hardly to be celebrated.  But at least they begin to clarify the future of regional development.  RDAs have not been abolished outright.  We are led to believe the views of business will determine their future.  But they will play a pared back role and have less to invest.  Behind the front line numbers the Government seems more inclined to cut in the south and east than elsewhere.  The picture is hardly crystal clear as yet, but at least the RDAs have something to work with.

As with any organisations, the RDAs have done some things well and could do some things better.  Independent evaluation suggests the RDAs return an average of £4.50 for every £1 they spend.  RDA investment has been an essential catalyst to major regeneration programmes, such as the Ipswich Waterfront and the renaissance of NewcastleGateshead.  The RDA role in business support has helped turn a baffling array of services for small businesses into a more streamlined and cost effective offer.  But RDAs have suffered when Government has broadened their remit with new responsibilities and diluted their focus on business led economic development.  Whether or not Regional Spatial Strategies were a good thing, RDAs were left with this unpopular responsibility as a consequence of their geographic remit, rather than their expertise in housing and planning.

Perhaps most significantly, RDAs have faced difficulties communicating what they do.  They use relatively small budgets (only in the Northeast is RDA expenditure more than one per cent of public spending) as a catalyst to private sector investment and to align the spending of other public sector bodies.  But while they serve this strategic role they have been measured against tactical results on the ground, such as the number of jobs created and the area of brownfield land regenerated.  This leads to confusion about what the RDAs are for – hands on delivery or strategic leadership.  And it results in bad feeling locally, where all the agents involved in a scheme set out to claim its results on the ground for themselves.

Local and regional confusion is compounded at national level.  RDAs are tasked with supporting the economic growth of all regions while reducing the disparity between regions – a built in contradiction in terms.  The Greater South East economy grew by nearly 18% from 1999 to 2006.  This was not reported as success for the RDAs in the south and east but as a failure of those in the north, although the economy there expanded by 15%.  On these measures, RDAs are damned if they do and damned if they don't.  But it shouldn't be a zero sum game.  To address inter regional disparities the UK’s economic drivers in the south and east need continued investment, so the returns of economic growth can be reinvested in the north where needs are different.

So what can RDAs learn from their journey so far and where do they go next?  Again, communication is one of the biggest challenges.

We are told that the future shape of RDAs will depend on the views of businesses and local authorities.  Businesses in the north have convinced business secretary Vince Cable to look with fresh eyes at the RDA record of achievement.  In the East of England, businesses have prepared a blueprint for investment that makes the case for strategic economic development at a scale beyond the local authority.  But persuading businesses and councils to champion the role of RDAs while previously committed programmes of investment are being cut is a big ask.

Three key principles can help the RDAs grapple with the task.
First, personal detachment.  Jobs and egos are on the line but the challenge facing the public finances and the economy supersedes the interests of any institution.  To fulfil their public duty to promote the economic development of their regions, RDAs need to set aside personal interest.  The arguments for and against strategic investment to create an environment in which business can thrive are top of the agenda.  The names of public bodies, or even their precise remits, are 'any other business'.

Second, RDAs need to demonstrate how their core strategic role is in line with the Government agenda.  They can bring greater efficiency to public sector spending by aligning streams of funding and targeting investment where it will deliver greatest economic return.  This can be exemplified by the nature of the cuts RDAs choose to make.  Which programmes are of greatest strategic importance to the economy and which, however worthy, would return least per pound of investment?  By shouldering these tough decisions RDAs will demonstrate their value in austerity Britain.  They may lose some friends in the process, but it's better to be respected than liked.

Third, RDAs need to live up to their billing as business-led and arms length from Government.  They need to challenge Government thinking where necessary, provide impartial economic evidence that no other body can provide and demonstrate that local businesses support their arguments.  If they wait to be told what to do by Government, they will both abdicate their responsibilities and speed their own demise.

RDAs must demonstrate their impact on their own terms, make cold, calculated economic arguments, and shoulder some unpopular funding decisions.  They may still be abolished, but at least people would understand what they stood for.

Jon Bennett - Director 

www.linstockcommunications.com