John Roughan: Too important for democracy

Pope Francis and corporate leaders such as Solid Energy chairman Mark Ford (above) are chosen out of the public eye. Photo / Sarah Ivey

Like the church, business is best led by a responsible few

Waiting for the white smoke this week, I wondered how many Catholics would want to vote for a Pope. My guess is none.

It is interesting that people do not demand democracy in some of the most important institutions in their lives. The organisations that employ most of us are ruled much like the Catholic Church.

Company boards of directors meet like the college of cardinals to choose a chief executive whose word will be law for the hierarchy below him.

The boards are every bit as self-perpetuating as the cardinate. Vacancies are filled from a limited pool of candidates, usually known to the incumbents, and though corporate boards, unlike the church, have to put their nominees to a shareholders' vote, it is nearly always a formality.

It is much like the vote that China's communist party gave its members once the central committee had chosen the man who takes over tomorrow.

Business executives, like priests and apparatchiks, climb the ladder by impressing those above them, not necessarily those below. When they occasionally face a democratic forum, such as a select committee of Parliament, they are seldom impressive.

Witness Mark Ford, an Auckland corporate superstar sent to the rescue of Solid Energy. In the glimpse television gave of his appearance before the commerce committee last week, we saw nothing of the qualities he must possess.

Yet by and large those of us who work for large companies are content with this system, as content as Catholics today with their new Pope. That is to say, we and they trust the selectors have chosen wisely.

The source of this trust is not the selectors themselves; company directors, like the cardinals in the news this week are just names to the vast majority of those who rely on their wisdom - often not even their names are of much interest unless they are about to make a big decision.

The source of our trust is, I think, the responsibility they carry. It changes the way people make decisions.

I will bet that whatever was in the minds of the cardinals in the Sistine Chapel this week, it bore little resemblance to anything written or spoken by the reporters outside.

Issues such as gay marriage, paedophilia in the priesthood, Vatican finances and much else of importance were probably peripheral to their thoughts. You don't have to be religious to believe that when these men say they are guided by prayer, they really are.

Prayer in this context is an intense mental discipline. It is, I imagine, a surrender of personal views, allegiances, predilections and even rational evaluations made earlier. It is a difficult, strenuous opening of the mind.

Confined in the chapel, thinking, praying, voting round by round, the cardinals must sense a collective wisdom greater than any individual. When the Pope appeared on the balcony he was subdued, almost frozen for a few minutes, by what had happened to him.

A position of responsibility at any level, I think, carries a discipline on the personal views and inclinations of anybody worthy of it.

Directors of a company accept a statutory responsibility to act in its best interests and protect the investment of its shareholders. They know they will be judged by the company's financial performance.

Decisions made in a company boardroom are bound to be more carefully considered and objective than the average vote in a general election. It is little wonder that democracy doesn't rule in the private sector. Business is too important, without it there is ultimately no employment, no taxation, no public sector.

The socialist experiments of the 20th century were exercises in economic democracy that didn't work. Industries organised by worker soviets or trade unions as powerful as printers, miners and watersiders became, produced fairly bleak and cynical societies.

Since then, the trend has been in the other direction. Democracies have entrusted their economies to a corporate cardinate not only in the private sector but in "state-owned enterprise" and even in civil society where sports organisations and the like are now run by boards of business expertise.

Democratic bodies are not very good at holding the cardinate to account, as Parliament proved with Solid Energy this week. Its commerce committee summoned Don Elder into the lions' den but the lions turned out to be limp. Labour's Clayton Cosgrove was less interested in the performance of Elder's board than that of the Government as sole shareholder.

Elder left some commentators confused because he gave a reasonable explanation for what happened, then apologised for it. Every employer can understand that, it expresses the responsibility they bear.

The hearing at least demonstrated that politics is poisonous to business discussion and governments are not enterprising investors. Democracy is great sport but some decisions are sacred.