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Jenkins' law: a plush new HQ spells corporate doom


Simon Jenkins
 
 
 
Let me begin with Jenkins’ law. It is an indispensable aid to judging governments, institutions and firms. It states that “any outfit moving into a splendid new headquarters is heading for the rocks”. There are no exceptions. The law is ironclad.
When scaffolding rose round Broadcasting House in London last year, I assumed it was only a matter of time before the BBC Chairman or the Director-General would go. Then cranes sprouted over the corporation’s vast bureaucratic compound at White City. It was a sign that both top men would leave together. The place had gone “overheads berserk”. It often happens when people are given too much public money.

 
 
When the wraps came off the Secret Intelligence Service’s glittering ziggurat in Vauxhall, visitors were invited to discuss how the service might exploit its new-found prominence. Some of us suggested that a secret service should surely remain secret. But its bosses craved public notice. Soon afterwards the IRA rocketed the place. Now the SIS has fallen victim to Tony Blair’s craving for self-exculpation. The Butler inquiry will probably advise a new “intelligence capability” inside No 10.

The law is in cruel operation everywhere. Parliament was ticking over happily until it moved into lavish new premises with palm trees, gyms, cafeterias and high-tech seminar suites. Cossetted MPs duly left government unscrutinised and are now held in contempt. Down river sits the Greater London Assembly. Its members fought the mayor like cats when crammed into Marsham Street. Now in their multimillion pound goldfish bowl they are as pointless as MEPs. Members of the Scottish Parliament in Edinburgh are equally cursed.

No sooner did the Department for Culture, Media and Sport move into a sunlit atrium off Trafalgar Square than it was lost in vacuous mission statements and political correctness. Covent Garden staged fine opera before it spent megabucks rebuilding its entire neighbourhood. Now it is lovely backstage and mediocre on stage. English National Opera has driven itself close to bankruptcy on a similar venture, and still has not reopened. When the Metropolitan Police moved from scruffy New Scotland Yard to a computerised purpose-built tower in Victoria Street, London’s crime rate soared.

Nor is the corporate sector exempt. Four years ago British Airways under Lord Marshall and Bob Ayling decamped into “state of the art” headquarters at Waterside, Heathrow. The company nosedived. LWT was a glory of London until it took over a monstrous tower on the South Bank. It was gobbled up by Granada. Sainsbury’s was cock of the retail walk in its old offices in Southwark. As soon as they moved behind a frigid wall of Foster glass at Holborn Circus, Tesco cruised ahead of it.

Inspiration for the law goes to the management guru’s guru, C. Northcote Parkinson. The professor’s first law is wellknown: “Work expands to fill the time available for its completion.” Another law, the Administration Block, examined what happened when organisations indulged in architectural self-aggrandisement.

Parkinson noted that publishers were happy and successful when in squalid premises up back stairs surrounded by books. When they moved to corporate offices they were invariably taken over, reorganised and bankrupted. Something went wrong. Indicators of doom were simple: receptionists “with carmine lips”, executives who stared you in the eye, ankle-deep carpets and, most ominous of all, a Matisse above the chairman’s desk. These might appear symbols of excellence. They were always the writing on the wall.

People who engaged in dynamic discovery, innovation or enterprise, Parkinson concluded, had no time to worry about offices. They had no inspiration to waste on “planning or executing the perfect headquarters”, even if they had the fortune these costed. Only when executives were past their prime did they devote their energies to playing with plans, models and ergonomic layouts.

Parkinson looked at large organisations throughout history. The 16th-century papacy built a new Rome only when its temporal power was fast ebbing. Versailles was completed only when Louis XIV was going into decline. The unveiling of viceregal New Delhi in 1929 coincided with the sun setting on British supremacy in India. The authority of the United Nations never recovered from the erection of a pompous slab of bureaucracy on the East River, New York .

To Parkinson an executive’s importance was measured by the number of guards and assistants cluttering the path to his office. This was multiplied by the number of internal buttons on his telephone added to the depth of his carpet in centimetres. The formula, he said, “was reliable in most parts of the world”.

The formula needs adapting for big organisations. Turnover should be divided by the number of committees required to validate a decision plus the number of times an executive says: “I think we should call in consultants.” This will indicate the number of years before the celebrity architect, “Sir Costly Ballsup”, murmurs to the chairman at dinner that he surely needs a building commensurate with his increased dignity. That figure will equal the square root of Ballsup’s underestimate of the eventual cost.

Divide that figure by the number of floors in the building and limousines in the car park and you arrive at the crucial sum, the length of time before management morale and/or share price collapses and the boss has to resign. This period can be doubled if public money is available, as with the Strategic Rail Authority.

The formula is the foundation of Jenkins’ law. But as Marx said, interpreting the world is not enough,“the point is to change it”. For that we must examine why the law applies. Parkinson’s insight was profound. When any organisation is expanding, its executives are consumed by the task in hand. Eyes are on the ball, money is tight and infrastructure “fit for purpose”. While a doctor or a lawyer may need a Rolls-Royce or a Picasso to impress a client, most organisations regard such baubles as consumption, not investment. That especially applies to building inflexible and costly headquarters. Bosses who are ruthless in cutting the spending ambitions of underlings are naturally indulgent of themselves. Headquarters spending is always “vital”.

I am sure most workers at BA, the BBC or MI6 have been mildly embarrassed at the amount of money squandered on property in recent years. But they would have seen it as money spent as the result of some organic aggrandisement. Whether in the public or private sectors, growth is synonymous with success. The executive’s job is simply to validate the spending. Besides, extra space always means bigger empires. Parkinson’s law can be amended to read “work expands to fill the space available for its completion”.

Organisation theory has long pondered E.F. Schumacher’s maxim that “small is beautiful”. While appealing, the maxim could not explain the dynamic nature of business. Growth builds on itself. Ford Motors became big because it was good. The BBC expanded because it retained public confidence. Four-page daily newsheets would not survive today. So how can we judge the moment when size becomes dangerous and decline sets in?

I believe the headquarters test is robust. New buildings tend to appear just when success is turning into decline. It is the moment when growth comes to a halt. If market share no longer surges, at least headquarters can. Anyone who has built or moved house knows what happens next, trauma and tantrum. Days are spent discussing who and what goes where. Location is all. Every decision wounds someone’s pride. The networks and loyalties on which any organisation depends are bruised and broken. The Office is no joke.

I wonder how many meetings Greg Dyke and Gavyn Davies spent debating HQ reorganisation when they should have been monitoring dodgy scripts. I wonder how many man-years opera executives spent on buildings rather than art? What were the spies doing when John Scarlett was selling their souls to the devils of Downing Street? There is no argument. Eyes were off the ball. When the board starts gazing wistfully at plans and drawings, we should all sell the shares and head for the hills. Doom is round the corner.

And since you are about to ask, The Times is produced in conditions so cramped as to be barely this side of the law. So tempora vivant!