In testing times it’s human nature to turn to the knowledge and experience of leaders.
Six months into recession, which has already claimed some of the biggest names on the high street, that instinct is as strong as ever and the quality and judgement of the senior management of businesses up and down the country is under the spotlight.
This has certainly been the case for the financial sector, but it applies to retailers too. If recession is going to turn to recovery, the success of the retail industry is vital.
All those linked to the sector – banks, shareholders, suppliers, everyone – need to be able to proceed on a basis of knowledge, understanding and trust. That means retailers that need access to funding need to be confident that they have sound management structures in place.
From my perspective, this emphasises the importance of relationship banking. Assessing a business’s management structure and building a close working relationship with key individuals gives us a deep understanding of what a company is trying to achieve, how it intends to get there and what financial support is required.
What we’re seeking to establish is that the business has a vision that is well communicated and supported by the senior management and stakeholders. In most cases this should be represented by a three-year plan, but in today’s climate it’s essential to have a plan B that a company can activate if sales or margins slip.
But it’s not just about vision and structure. The attitude and skills of the management are all-important. Well-run businesses have breadth and depth to their management teams with clearly defined responsibilities.
This extends to the key role of the non-executive directors in challenging the board’s decisions. What’s more, good leaders learn from their experiences. It’s no surprise that those companies led by hardened retailers who have survived previous downturns are the best prepared for a tough year. These will be the people who lead the retail industry out of the recession and their companies will be the strongest.
Lenders should also be looking carefully at the second tier of management. These executives need to share the company’s vision and be clear about
where the business is heading.
For the most part, these will be the people who bring the business’s vision to life.
As a sector that employs one in 10 workers, the success of retail is critical to our economy. We’re keen to support well-managed businesses, but retailers looking for access to capital must be able to demonstrate their leadership
Charles Lamplugh is retail relationship director of Lloyds TSB Corporate Markets.