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03 October 2004
Sunday Herald
Business bodies must evolve or face extinction

How many business groups does it take to change a lightbulb? In Scotland, apparently at least a dozen.

The country is awash with organisations all purporting to be absolutely crucial to the development and promotion of a healthy business community.

There are those that lobby on common concerns such as transport, water infrastructure and business rates (such as CBI Scotland, Scottish Council Development and Industry). There are those that work on behalf of the little guy (the Chambers of Commerce, the Federation of Small Businesses and the Forum of Private Businesses). Some have a more entrepreneurial and networking bent (such as the Entrepreneurial Exchange), while others place a greater emphasis on training (Institute of Directors).

That doesn't even take into consideration the wide range of more sector specific organisations for areas including financial services, electronics, life sciences, tourism, engineering. The list goes on and on.

With membership fees ranging anywhere from (pounds) 100 to tens of thousands, it is little wonder that companies are throwing their hands up in exasperation and choosing to be far more selective with their funds.

Business groups are having to work harder for their money, so to speak, and justifiably. In a country of five million people, the number of business organisations might even have become more of a drain than a boon for the economy.

Corporate spending on membership fees is coming under greater scrutiny with more pressure on boards to justify such investments in terms of measurable benefits.

The growing interest in corporate social responsibility is one of the trends that is causing large companies to look anew at what they are members of and what benefits they derive.

And as Scotland's biggest players - notably the two leading banks The Royal Bank of Scotland and HBOS - become powerful persuaders in their own right, there is less justification for them to join forces to lobby.

Also, as markets become more international (Scottish fund managers, for example, are now selling their investment skills to institutional investors all over the world) many are questioning the need to be a member of a business lobby group whose main focus is on lobbying a parliament that has little power over their sector. Most of the big decisions that affect financial services are, after all, taken in Westminster and Brussels.

So it is perhaps hardly surprising that cracks are starting to develop in the patchwork of lobby groups. Rumours are swirling that the IoD is scaling back its operations north of the Border (although these are strongly denied by its leadership). Sources have suggested that revenues are on the wane at Scottish Financial Enterprise, partly as a result of mergers in the financial services sector. And Quality Scotland is said to be facing an uncertain future.

Consolidation of some of these organisations would be one obvious answer. The so-called Big Five organisations are already working together anyway in lobbying the Scottish Executive on matters of common interests, such as business rates.

But as with all these things, nobody wants to be the one to suggest giving up on the independence of an organisation that may have a proud history.

One can't help but imagine that many such organisations are holding on for dear life, hoping that one of their rivals will be the first to fall. The survivors will then seek to justify their own existence and mop up the membership of their recently deceased rival.

Business organisations must read the writing on the wall, and those who run them should leave their egos at home and consider the merits of joining forces.


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