Deeply in Debt

More than 300,000 adults are too deeply in debt to apply for bankruptcy

Charities are urging the Government to offer a cheaper alternative for people in financial difficulty

Research from the debt charity CAP (Christians Against Poverty), revealed exclusively by The Independent today, shows that people in this group – larger than the population of Swansea – have such little disposable income that they would typically take more than 600 years to pay off their creditors.
What prevents them from resolving the situation by going bankrupt is that they cannot afford the £705 fees which need to be paid to the court and official receiver.
CAP, along with the insolvency association R3 and others, is calling on MPs to enable more people to use a cheaper alternative to bankruptcy – a debt relief order (DRO) – for which the fee is just £90. The route that they propose is for the current threshold for DROs to be doubled to £30,000. At the moment, individuals can opt for a DRO only if their debts amount to £15,000 or less. R3 will be lobbying MPs at their party conferences, which kick off tomorrow with the Labour event in Manchester.
CAP and R3 are both making submissions to the Government's Insolvency Service, which has asked for evidence before 9 October on the need to raise the threshold. Nick Cosgrove of R3 says: "We are confident that there will be some movement."
The £15,000 limit was decided in 2005, before DROs were introduced in 2009. The Government appears to accept that an increase of some kind is needed – but it has not said that the limit should be doubled.
There are arguments against an increase as well, of course. Bev Budsworth, managing director of The Debt Advisor in Manchester, says: "There are a lot of bankruptcy tourists – particularly from Poland – at the moment. You'd see a lot more bankruptcy tourists coming over if the DRO limit goes up." And she cannot see that the £705 bankruptcy fees could easily be brought down, adding: "Access to bankruptcy is expensive but the Insolvency Service is underfunded and has had its budget cut so severely that you can see why there is the charge."
But lives of honest people are being put under considerable pressure at the moment, according to CAP. Mark Cowley, an adviser with the charity on DROs, says that people who cannot afford the bankruptcy fees can face a "massive lack of hope". Although CAP has raised fee "bursaries" for 108 people this year – mainly by applying to retail, armed forces and other industry sector benevolent funds – it believes that a better solution needs to be found. CAP sees the solution as the raising of the DRO level. In total, 7,006 people went through the orders in England and Wales in the second quarter of this year, and 5,452 went into bankruptcy.
Many of the people who would benefit from a higher DRO threshold are those who were working before they were knocked sideways by an event such as redundancy or ill health (see right). These people, according to Mr Cowley, can end up with just "pennies to spare each month" after they have paid their bills and bought food.
When they were working, they might not have regarded £705 as a large sum – but, when they become insolvent and go on a creditor repayment plan, they can find that it would take them at least five or six years to save that amount.
Case study: Bankruptcy bursary
Michael, a chef in Chatham, Kent, didn't know "which way to turn" after he had a heart attack, was made redundant and then got into debt. Married with a four-year-old daughter, he ended up with payday loans and credit card borrowing as he tried to find a way out for his small family. When he finally went to CAP for help, he owed £19,000 – and that put him above the limit for a simple DRO and its £90 fee. The prospect of never sorting out his relationships with his creditors was a highly stressful one: "I thought I was going to have bailiffs knocking on my door." He was unable to find the £705 he needed for bankruptcy.
But CAP raised the sum from a benevolent fund that helps people in the hospitality sector. Michael was extremely relieved. "We haven't got to worry about those nasty letters and phone calls," he said.
CAP's Ruth Millward, based in Gillingham, sorted out arrangements for the bankruptcy hearing (which was just about to happen as The Independent went to press) and took over from him in dealing with creditors. If they had not managed to get the bankruptcy bursary for Michael, Ms Millward says the future would have been very problematic. "For Michael, things would have dragged on for a long, long time. Your shoes wear out, your clothes wear out. Being in this position does not let people restart their lives."
But Michael is relatively fortunate. "The vast majority of my clients are in a situation with no way out," says Ms Millward. "A lot of them are on £15 a week for food and spending. You only need one thing to go wrong – such as going to hospital – and it tips them over the edge."

Source Independent

Richard Branson Tops 'Most Admired' Boss Poll

The Virgin tycoon beats Sir James Dyson and the late Lord Weinstock to top a survey of business leaders asked to rate their peers.

             Richard Branson came out on top 'by a good margin'

Richard Branson has been voted Britain's most admired business leader over the past five decades, in a poll of top bosses.

The Virgin tycoon was voted the runaway winner by a survey of FTSE 100 and FTSE 250 chairmen, chief executives and chief financial officers, non-executive directors, lawyers, accountants and headhunters.
Sir Richard beat vacuum cleaner designer Sir James Dyson and the late Lord Weinstock, who built GEC into an electrical and engineering empire - both runners up in the poll published in today's The Sunday Times.
Dominic O'Connell, business editor of The Sunday Times, said: "This is the authentic insider's view on who has made the biggest impact on British business over the past five decades. We asked business leaders to rate their peers - and Branson came out on top by a good margin.
"He has his critics, but this is a tribute to his longevity, and his impact across a big number of industries."
The poll also showed a "marked predilection for industrialists".
Mr O'Connell said: "Our highest-rated businesspeople included Sir James Dyson of vacuum cleaner fame, Sir Ernest Harrison, the man who brought us the mobile phone, and Arnold Weinstock, the former boss of GEC.
"Away from manufacturing, the stars were Sir Terry Leahy of Tesco and Sir Martin Sorrell of WPP."

Source Skynews

The problem with smart people-Sydney Finkelstein

Sometimes a talented person can be an ineffective manager. (Jeff Vinnick/Getty Images)

When hiring, promoting, even just putting together your team, you should look for the smartest people in the room, right? Not so fast.
Intelligence is one of those characteristics where there is a minimum level needed to be in the game. Once past that, too much intelligence can be a drawback or worse.

The Enron management team, for example, were known as “the smartest guys in the room.”  Consider how well that turned out. The former US energy trading company tapped its top talent to run some of its most-profitable divisions, almost without supervision. The managers, despite their smarts, were an arrogant, insecure bunch who took wild chances and lost billions of dollars. The company dissolved in 2001.

The problem with really smart people is that they often think they know more than everyone else.

Certainly, the job for which you’re hiring makes a difference. I do want big-time intelligence for researchers, analysts, and coders, but you can lock those folks in a room and let them do their thing because they work on their own. If they lack emotional intelligence or interpersonal skills, any damage they do is limited because of their independent work.
But do I really need to find the smartest managers?
The problem with smart people
The problem with really smart people is that they often think they know more than everyone else. Maybe they do. But that doesn’t help them when they’re trying to get others to buy into whatever they’re selling. For example, I was coaching one senior executive who always seemed to be one step ahead of everyone else on her team. At least, that’s what she thought. One of the biggest challenges she faced was recognising that other managers didn’t necessarily view the world the same way. That meant she needed to invest the time to bring them along if she wanted to get traction on her preferred projects.
When you know the right answer, you often can’t believe that everyone else doesn’t just see the same thing, and fall into line.
Unfortunately, organisations don’t work that way. Especially when working with peers when you don’t have direct authority over them, the only way to get momentum toward your preferred outcome is to sell them on the idea. Imposing your “superior” solution just doesn’t work.
The irony is that sometimes the most talented person can make for one of the most ineffective managers. You can see this in sports, for example, where retired superstars often find it difficult to coach or manage successfully because they are now supervising lesser mortals that weren’t blessed with the same degree of innate talent.
Wayne Gretzky, the Canadian hockey legend who retired with more personal scoring records than anyone in the history of professional hockey, was remarkably ineffective as a head coach. The same may be said about Michael Jordan, perhaps the greatest basketball player ever, who has never been able to lead a successful basketball organisation whether as general manager, president or owner.
It could be just as bad when we let the A-level crowd go to market with what they see as the best product. I remember talking to managers at Singapore-based Creative Technology, Inc after the iPod had just been introduced by Apple. Creative had a technologically superior MP3 player, but customers preferred the iPod, to the utter dismay of the Creative managers. They just couldn’t understand how customers were so irrational!
But it turns out that the best technology doesn’t always win, just like the smartest people don’t always succeed.
It’s not just brainpower where more may also not be better. For example, is it good to keep reducing the time it takes for technicians to help customers requesting assistance via call-in centres? What about the quality of the advice, how the customer perceives the value of the advice or even whether it’s such a great idea in the first place to try to optimise on speed?
Zappos, the US-based online shoe store, actually rewards employees for spending more time with customers who call in with questions about products they are thinking of buying. For Zappos, customer experience on a call trumps any simple metric that, in its view, can actually detract from profitability.
When employees are motivated to cycle through customers as fast as possible, platitudes that the customer comes first are just that — empty, cynical slogans that mean nothing to sales staff.
And let’s not forget the side effect that accompanies this culture. People who really care about service look elsewhere for work. That leaves demotivated employees who actually do a good job of hitting their time targets. In the end, you get what you want, but you lose because of un-nuanced thinking that more is better than less.
Call it brilliantly fulfilling the wrong vision.
The quest for more may well be the defining ethos of our time, but the downside that comes with this single-minded fixation warrants greater attention. Relying on the smartest and the most talented to lead and manage people and teams may be one of those things that sounds a lot better in theory than in practice.

Culled from the BBC News