The collapse of Carillion, a company with more than £2bn in revenue, sent shockwaves through the public and outsourcing sector. For the CBI and its members, the collapse represented both challenges in the public sector marketplace and the dangers to firms when corporate governance fails to hold a business to account.
The is key for many CBI members who supply into the public sector, highlighting the importance of effective senior leadership, the role of robust audit mechanisms, and the challenges in the public sector marketplace when procurement and contract management is not done well.
The CBI’s response noted that Carillion’s business practices were irresponsible and some, indefensible. Its short-term approach to sustaining revenue through winning new business to pay for debt and losses placed its almost 20,000-strong UK workforce at risk.
Business and government should work together to promote the value and benefit of focusing on long-term outcomes, putting social value and corporate responsibility at the heart of business performance. Government, as a significant client, can inspire this in the way that public sector contracting evolves: through forthcoming policy development on payment practices, social value metrics and outsourcing behaviours within government.
For their part, businesses must ensure that fair, transparent and progressive behaviours are central to their operation. Responsible leaders have a duty to run firms for the benefit of customers, staff and society in the long-term.
The CBI’s response also noted the necessity of robust corporate governance to ensure effective scrutiny of business leaders and their teams.