Revolving Door Connections not so Dangerous?

The ScotlandonSunday website ran an interesting article on the weekend called ‘Study reveals true extent of ‘old boys network’ between Government and banks’

It quoted a report which identified key individuals who have moved jobs between politics, financial institutions and the bodies charged with regulating the banking industry in Britain.

The report warns the close relations between business and politics "lead to a conflict of interest at best and a suspension of critical faculties at worst".

The study of 116 of the world’s most successful companies will be presented to a Global Forum on Public Governance, run by the Organisation for Economic Co-operation and Development (OECD), in Paris this week.

The research looked at so-called "revolving door connections", when a company employs former or current politicians, civil servants or members of regulatory bodies, or where individuals move from the financial sector into politics, Government or regulatory bodies.

Barclays was the most connected British-based company with 14 revolving door connections, and in South Africa they are involved in ABSA, who now has its own example with Marina Ramos and the Trevor Manuel link up. The same applies to Union leaders now in Government.

What is interesting from the article is that perhaps there is an upside to the conflict of interest issue and that is that governments will better understand business and vice versa.

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Where it has implications is that organizations keen to build and sustain their reputations, need to factor these types of issues into their recruitment & selection and decisionmaking practices. There is a saying – Be Careful who you get into bed with. The same goes for directorships. In an era where there is a call for corporate responsibility and governance, even lobbying, recruitment and partnering can potentially do damage.

I believe that even though these issues are handled by different departments, it definitely can be seen as a stakeholder management issue. Deciding which role player and stakeholder needs to be brought onboard are strategic decisions of the highest order.

What will be important is to anticipate what other stakeholders will say when you make a decision to use revolving door connections. Not only do you have to determine the strategic impetus of the decision, but also what perceptions it will create.

The dynamics on decisionmaking processes can be important, but often the corporate immune response (OD parlance – the corporate culture)rectifies this fairly quickly with little damage.