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Bucking the trend

Bucking the trend Editor's comment urveys need to be treated with comments of businessmen I have Conversely, the argument was put S caution. With some, the questions spoken to, both at informal meetings to me by one bank manager that, in are loaded, or the findings "doctored", and in the course of preparing articles. his experience, businessmen seeking for propaganda purposes. Others Again, it is a matter of specifics. a loan for expansion too often have readily give a sample number, but One complained that, far from taxation only a hazy idea of what they can conspicuously omit the level of response. inhibiting growth, it forced him to expect on capital return and the Thus , a trend or opinion which is expand since it was only by offsetting precise nature which the borrowed supposedly applicable to many may, new capital purchases against tax that money will have on the performance in truth, be based on a few. he was able to minimise the tax of the business. Perhaps the most misleading aspect burden. This policy also made it N o doubt there are many who will easier for him to borrow money since of surveys is that, by definition, they refute the points made here and come he was increasing his firm's asset deal with generalities rather than up with their own. specifics. value and therefore his credit rating. But contradiction is the very essence For every adverse opinion-sounding I have come across several major of specifics. report on labour relations, there are a companies who have talked about shelving investment plans because of host of firms able to say that they have never had a strike. uncertainty over the general economy, Postscript to perks or because of an adverse change in For every survey into business their particular market, but rarely has prospects, which produce a dismal ince my comments in the December picture of falling order books, there this been the case with small and S issue of IM about the pernicious medium-sized companies. are manufacturers reporting that they effects of fringe benefits on real have never been so busy. This should come as no surprise, earnings, critical observations on the since the sums of money being talked So, it was with some reservation same theme have come from two that I looked through a survey report about in the latter case reflect a other sources. carried out by accountants Coopers relatively small stake in the market Speaking at a pay and productivity and Lybrand into the investment and are not influenced by general conference, the Hon. David Montague, economic factors to anything like the thinking of medium-sized companies. chief executive of the Orion Bank, extent of a major company with Ther e can be no question of a said: "The low pay/high benefit pattern millions of pounds at stake. propaganda exercise here; the survey which is now becoming generally was carried out at the request of the T o put it in a more mundane accepted in British life carries the Wilson Committee looking into in­ context, a householder is unlikely to seeds of the destruction of our spirit dustrial investment. put off building an extension because of enterprise." Th e smallness of the sample - interest on the bank loan is one per H e said that instead of work being cent higher than a year previously. "abou t 50 " - was the cause of further rewarded in the size of the pay reservation, but at least the survey Necessity is so often not only the cheque , industry was opting for a mother of invention but also of produced a healthy response -48 . "motley patchwork" of indirect rewards. growth. Firms - particularly those of The findings caused little surprise Th e proliferation of fringe benefits recent existence - decide to expand when placed against the background comes as no surprise to the Economist of similar surveys. Reluctance to not because of some extra business Intelligence Unit, which notes that borrow money because of lack of which may, or may not, materialise, over the last five years fiscal drag has but because they otherwise risk losing confidence in the British economy; produced a 22 per cent increase in the orders. fears that "cheap" money will turn tax rate on salaries at the £10,000 a out to be more costly once the borrower Tw o further points in the survey year level. is committed; the argument that which are worthy of comment. One "I t is no longer a simple matter to expansion is pointless anyway since reason given for fighting shy of know how to value a fringe benefit in any increase in profits accruing from expansion is that firms prefer to comparison with cash salary or to growth will be swallowed up in taxes. maintain small units, thereby preserv­ know how to compare the total ing efficiency and manageability. In the course of the survey, Coopers remuneratio n (salary plus fringe and Lybrand found not a single Tha t is a welcome enough attitude - benefits) from one job to another. conditioned, no doubt, by reports of instance of an investment proposal "A s a result," says the EIU, being rejected for lack of finance or what can happen when an organisation's "employee s may find themselves because of conditions imposed by growth outstrips control. having to take important career de­ lenders — a point which is more or less Secondly, there is some criticism of cisions in semi-ignorance." echoed elsewhere in this jssue by Ian lenders - particularly the managers of Put another way, if managers don't Fraser, chairman of the City Capital High St clearing banks - for not being soon forego the soft option of perks Markets Committee. sufficiently attuned to the way industry and secure real improvements in pay, operates and some of the problems it Yet, in the course of reading the that company car will be taking them has to contend with. survey, I couldn't help but recall the for a ride in more ways than one. 4 INDUSTRIAL MANAGEMENT http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Industrial Management Emerald Publishing

Bucking the trend

Industrial Management , Volume 78 (3): 1 – Mar 1, 1978

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0007-6929
DOI
10.1108/eb056833
Publisher site
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Abstract

Editor's comment urveys need to be treated with comments of businessmen I have Conversely, the argument was put S caution. With some, the questions spoken to, both at informal meetings to me by one bank manager that, in are loaded, or the findings "doctored", and in the course of preparing articles. his experience, businessmen seeking for propaganda purposes. Others Again, it is a matter of specifics. a loan for expansion too often have readily give a sample number, but One complained that, far from taxation only a hazy idea of what they can conspicuously omit the level of response. inhibiting growth, it forced him to expect on capital return and the Thus , a trend or opinion which is expand since it was only by offsetting precise nature which the borrowed supposedly applicable to many may, new capital purchases against tax that money will have on the performance in truth, be based on a few. he was able to minimise the tax of the business. Perhaps the most misleading aspect burden. This policy also made it N o doubt there are many who will easier for him to borrow money since of surveys is that, by definition, they refute the points made here and come he was increasing his firm's asset deal with generalities rather than up with their own. specifics. value and therefore his credit rating. But contradiction is the very essence For every adverse opinion-sounding I have come across several major of specifics. report on labour relations, there are a companies who have talked about shelving investment plans because of host of firms able to say that they have never had a strike. uncertainty over the general economy, Postscript to perks or because of an adverse change in For every survey into business their particular market, but rarely has prospects, which produce a dismal ince my comments in the December picture of falling order books, there this been the case with small and S issue of IM about the pernicious medium-sized companies. are manufacturers reporting that they effects of fringe benefits on real have never been so busy. This should come as no surprise, earnings, critical observations on the since the sums of money being talked So, it was with some reservation same theme have come from two that I looked through a survey report about in the latter case reflect a other sources. carried out by accountants Coopers relatively small stake in the market Speaking at a pay and productivity and Lybrand into the investment and are not influenced by general conference, the Hon. David Montague, economic factors to anything like the thinking of medium-sized companies. chief executive of the Orion Bank, extent of a major company with Ther e can be no question of a said: "The low pay/high benefit pattern millions of pounds at stake. propaganda exercise here; the survey which is now becoming generally was carried out at the request of the T o put it in a more mundane accepted in British life carries the Wilson Committee looking into in­ context, a householder is unlikely to seeds of the destruction of our spirit dustrial investment. put off building an extension because of enterprise." Th e smallness of the sample - interest on the bank loan is one per H e said that instead of work being cent higher than a year previously. "abou t 50 " - was the cause of further rewarded in the size of the pay reservation, but at least the survey Necessity is so often not only the cheque , industry was opting for a mother of invention but also of produced a healthy response -48 . "motley patchwork" of indirect rewards. growth. Firms - particularly those of The findings caused little surprise Th e proliferation of fringe benefits recent existence - decide to expand when placed against the background comes as no surprise to the Economist of similar surveys. Reluctance to not because of some extra business Intelligence Unit, which notes that borrow money because of lack of which may, or may not, materialise, over the last five years fiscal drag has but because they otherwise risk losing confidence in the British economy; produced a 22 per cent increase in the orders. fears that "cheap" money will turn tax rate on salaries at the £10,000 a out to be more costly once the borrower Tw o further points in the survey year level. is committed; the argument that which are worthy of comment. One "I t is no longer a simple matter to expansion is pointless anyway since reason given for fighting shy of know how to value a fringe benefit in any increase in profits accruing from expansion is that firms prefer to comparison with cash salary or to growth will be swallowed up in taxes. maintain small units, thereby preserv­ know how to compare the total ing efficiency and manageability. In the course of the survey, Coopers remuneratio n (salary plus fringe and Lybrand found not a single Tha t is a welcome enough attitude - benefits) from one job to another. conditioned, no doubt, by reports of instance of an investment proposal "A s a result," says the EIU, being rejected for lack of finance or what can happen when an organisation's "employee s may find themselves because of conditions imposed by growth outstrips control. having to take important career de­ lenders — a point which is more or less Secondly, there is some criticism of cisions in semi-ignorance." echoed elsewhere in this jssue by Ian lenders - particularly the managers of Put another way, if managers don't Fraser, chairman of the City Capital High St clearing banks - for not being soon forego the soft option of perks Markets Committee. sufficiently attuned to the way industry and secure real improvements in pay, operates and some of the problems it Yet, in the course of reading the that company car will be taking them has to contend with. survey, I couldn't help but recall the for a ride in more ways than one. 4 INDUSTRIAL MANAGEMENT

Journal

Industrial ManagementEmerald Publishing

Published: Mar 1, 1978

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