SCOTLAND may still be struggling to emerge from the economic recession, according to the head of a key business organisation.
Delegates will attend the annual conference of the Institute of Directors (IoD) Scotland at Cameron House on Friday, a week after the UK’s double dip recession was declared over.
Ian McKay, chairman of IoD Scotland, believes they will be in a potentially more upbeat mood, but cautioned that the Scottish economy may not have benefited from the 1 per cent upturn in gross domestic product for the past quarter, which was attributed to factors such as the Olympic Games.
“We could be seeing some green shoots, but I am more concerned to see whether the Scottish members will bear that out,” he said in a pre-conference interview.
“Scotland seems to be following a different cycle and it would not surprise me if we have not caught up. We may still be on our way out [of recession]. On such a small percentage this is a marginal game. However, you would have to say the curve has turned.”
Some high-profile speakers will address this year’s event, and McKay hopes they will provide an insight into the challenges they face at a time when business is tackling some major cultural and ethical issues.
Willie Walsh, chairman of British Airways-owner International Airlines Group, and Sir Michael Rake, chairman of BT, headline a cast list for the annual event that has attracted a good turnout among a growing IoD Scotland membership.
“We are getting people who are not showboating,” says McKay. “We have not told them what to say, but it is good that we are getting people who have some real issues to tackle and hopefully they will give us an insight into how they are dealing with them.”
He says leadership will be a theme of the event and that getting people of the calibre of Walsh and Rake is a recognition of the IoD’s role in galvanising discussion over important business issues such as governance and gender equality.
The IoD is enjoying increased popularity with its “director of the year” event sold out this year for the first time and membership rising, while some other bodies have seen a fall. Its profile among the young and women is also growing.
“We specifically appeal to the individual, whether in a small or large company, and members can mix with their peers,” says McKay, who took over the chairmanship this year.
He is a rare example of someone who has worked at senior level on both sides of industry and in public life. He was assistant general secretary for the Educational Institute of Scotland before being hired by the Royal Mail as director of Scottish affairs. He is currently a non-executive director of Lothian Buses and, since the beginning of this month, chairman of the newly combined Edinburgh College, bringing 35,000 students into one institution with a £70 million budget.
McKay is a great believer in public and private sectors working more closely together and hopes his experience will help.
He admits there is a mutual suspicion between the two sectors, but says this can only be worn down by understanding what each does and how they can contribute. “There are big jobs in both and we should be making sure there is a proper dialogue between them,” he says.
“When there is a lack of knowledge of what each does there will be some distrust. When they talk to each other they realise there are shared skills, a similar agenda and the same sort of problems.”
They differ in the timescale in getting things done and in the degree of risk they are prepared to take, he says.
“The public sector is slower, but that is because of the democractic process. The biggest difference between private and public is in their attitude to risk. In the public sector there is a fear of things going wrong, and the media plays a part in that because they will lambast public servants more if their decisions do not work out.”
But the private sector has also to learn from past mistakes about risk, notably in the banks, he says. “When risk becomes gambling you have made a mistake. It undermines confidence and trust in business partners. But when you see business leaders doing it for the right reasons it pushes the needle back towards trust.”
He says the relationship between business and the banks is improving and the hostility has eased as banks acknowledge past errors and attempt to introduce better systems for dealing with customers.
“There are signs that things are getting better and that we are moving to a more normal situation,” he says.