Five business leaders you should know

Fredrick Herzberg, Steven Covey, Malcolm Gladwell, Napoleon Hill and Charles Handy.

It is difficult to narrow the choice down to just 5 individuals, but I have chosen Fredrick Herzberg, Steven Covey, Malcolm Gladwell, Napoleon Hill and Charles Handy as the most significant mainly because of the influence they have had on others and because of their timeless relevance.

Herzberg I believe has had the most significant impact on organisations’ approach to motivating their staff and indeed his concepts are as relevant now as they were over 50 years ago. Nowadays we hear a lot about employee engagement and this is pure application of Herzberg’s principles and a recognition that those who feel more part of an enterprise and who have more control over their work are likely to perform better and make a bigger contribution.

Like Herzberg, Napoleon Hill is another business thinker who continues to have a great relevance to contemporary business life and it is easy to spot the influence he has had on others such as Covey  and Bandler and Grinder’s work on NLP.  The psychology of intention and outcome is fascinating and many successful entrepreneurs and business leaders have recognised their achievements have resulted through applying the right mixture of desire, hard work, visioning and tenacity. His principles are applicable to people at all levels and not just the aspiring Richard Branson’s of the world. Fundamentally they can help anyone to fulfil their potential if they know what drives them and what they want in life and if they are prepared to work hard for it.

As a journalist, Malcolm Gladwell’s is an observer rather than a theoretician but nonetheless, many of his observations especially in his books ‘Blink’ and ‘Tipping Point’ are having a significant influence on business thinking in the C21st. Tipping point provides a robust and practical guide to building brands and creating recognition in a world where there is exponential growth in the competition for attention. Blink highlights the importance of authenticity of leaders in business and the need for behaviour to be linked to beliefs and values.

Stephen Covey’s work ‘Seven Habits of Highly Effective people’ has created a universal framework for much of today’s senior management and leadership development. Although criticised by some as pure common sense, Covey’s work has provided millions of people with a roadmap which reminds us that excellence and success is not an act but a habit.

Charles Handy has been an important figure in how we view work and our relationship with employers and his publication the ‘Future of Work’ was prophetic. Employment no longer means joining a company for life and the relationship between employer and employee has become economic rather than paternalistic. People now need to manage their own careers and there are no jobs for life. Some feel this is a step backwards but Handy’s concept of Portfolio Careers argues that this creates opportunity for people to take more control of their destiny and fulfil more rewarding careers whilst organisations benefit through having a more flexible workforce which can adapt quicker to change.  

John Maxted, founder of international HR consultancy Digby Morgan (which he sold in 2011) is a consultant and non-executive director. He is a contributor to Business Gurus, published by Crimson Publishing,

Malcolm Gladwell, Photograph: Getty Images

John Maxted, founder of international HR consultancy Digby Morgan (which he sold in 2011) is a consultant and non-executive director. He is a contributor to Business Gurus, published by Crimson Publishing.

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.