The New Board of Directors

(Peter talks about the Board to John while they are lunching together.)

Peter Wiles:

I'm glad you could manage lunch today, John.

I really wanted to sound you out about the future.

Harper's death has caused a big change in the control of this company.

John Martin:

Yes, I realise that.

He was a strong personality, wasn't he?

Peter:

Yes, he was.

H.G. couldn't have everything his own way while Harper was Chairman.

Mind you, I'm not criticising my dear uncle.

He's a clever man, but I think we need to balance his power a bit, and that's why I want you on the Board.

John:

You know, I've been hoping H.G. would put my name forward.

But hasn't Alfred Wentworth been asked to join the Board now that he owns more shares?

Peter:

Yes, his name will be put forward at tomorrow's meeting.

That's why I believe I've a chance to get you elected, because H.G. will want to strengthen his position in case old Wentworth tries to make things go his way.

John:

Wouldn't I have to own shares to become a director?

Peter:

Yes, you would.

But the Rules of Association drawn up by Harper and H.G.'s father state that the qualification holding is only two shares.

So that's easily arranged.

I hold two and my mother nine hundred and ninety eight.

Anyway, I wanted to put you in the picture.

The next move is to get you made a director.

I'll see what I can do.

(Next day, at the Board Meeting.)

Hector Grant:

What's the next item on the agenda, William?

William Buckhurst:

We've got this problem of Alfred Wentworth, of Wentworth & Company.

He ought to be invited to join the Board.

Grant:

It's unfortunate, but I'm afraid he now owns so many shares that his election is inevitable...

Don't put that in the minutes, William!

Peter:

I would like to propose that our Sales Manager, John Martin, should also be asked to join the Board.

In the time he has been here he has greatly increased sales and done much to improve profits.

I think if he was made a director his advice at Board Meetings would be invaluable.

Grant:

Well, perhaps next year I...

Peter:

Be careful, H.G.

You don't want to lose him.

There must be a lot of companies who'd be prepared to offer him a directorship.

We can't afford to lose him.

Grant:

What do you think, William?

Buckhurst:

It might be a good idea to strengthen the support for yourself, H.G.

Grant:

Very well.

As the Character of the Board is changing so completely, this is probably the right moment... yes... I agree.

John would be a useful counter to Wentworth.

If everyone agrees...

Peter:

Yes.

Buckhurst:

Agreed.

Grant:

William, will you draft suitable minutes about these two proposals then?

Buckhurst:

Yes, I will.

Grant:

Now the next item on the agenda is to consider a report with recommendations tabled by you, William, on budgetary control.

Perhaps you'd like to give us an outline of your proposals.

Buckhurst:

As everyone here knows, I have just attended a course on financial control, and as a result I really do consider we should do the accounts more often than we do at present.

Grant:

At present the accounts are done every quarter.

Buckhurst:

Yes, but quarterly accounts don't allow us to keep a close enough control.

If the company should suddenly make a heavy loss we ought to be able to act quickly.

If we don't, it may be too late to prevent the loss getting larger still.

Grant:

Well, if sales go down, we reduce stocks, which means cutting down purchases and, if necessary, we reduce personnel.

Buckhurst:

Yes, but we need the information faster than we're getting it at the moment.

If profitability goes down - that is, profits in relation to sales turnover, or in relation to capital employed - it may be necessary to increase prices, cut costs and so on.

But the right information must be readily available.

Grant:

What do you propose?

Buckhurst:

What I would like to do is to break down the activities of the company into cost centres.

Grant:

What does all this mean?

Buckhurst:

Each manager would be responsible for at least one cost centre.

He would be required to forecast, well in advance, the income and expenditure of his centre.

Then we put the budgets from all the centres together.

When they've been approved they become the annual budget, or plan, of the company.

If the actual income or expenditure varies a lot from any budgeted figure, then that manager would be responsible and would have to explain why his actual figures differed from his forecast, and take appropriate action.

Grant:

Will you let us have more details about this budgetary control, exactly how it would operate and so on?

Buckhurst:

Certainly.

Grant:

Now let's get on.

The next item on the agenda is a recommendation that we buy two lorries for the Transport Department...

EIGHTEEN