The E.M.I. Paradigm

The private equity firm, Terra Firma, owned by Guy Hands, bought EMI for L3.2bn in August. With no experience of the music industry, Guy Hands walked in and artistes have been walking out, most recently, and probably most fatally, the Rolling Stones.

For twenty years the Rolling Stones seemed content to work with EMI, now they are flirting with Universal. Where has Guy Hands gone wrong? Every business has its own peculiar practices, none as peculiar as the music industry. Long before the Internet, recording companies treated their artistes as Royalty.

Eartha Kitt describes a Red Carpet being rolled out for her when she signed with her company. Others describe expensive gifts. This is because of the millions of dollars an artiste brings to a label. That EMI was purchased for 3.2 billion English pounds is a clear signal how lucrative a recording company can be. Yet, Guy Hands, unable to differentiate between a music company and an oil company made errors which those even slightly familiar with the Industry would not make in their sleep.

What did Hands do? He cancelled parties, candles, flowers, all the little perqs artistes expect, then had the temerity to send out a letter stating that bands which didn't work hard enough would be fired. Excuse me?

Did he think he was dealing with salesmen? Did he think there was some kind of "quota" system in producing hit records? The confusion of Hands was compounded when he inquired if underperforming bands have to hand back advances to the label. There is no debate why the stable at EMI will soon be empty. And Guy Hands must take full responsible for his ignorance. This is just a very public portrayal of the kind of bad practice which many businesses engage it.

Many companies I have troubleshot over the years have reached perigee because of the wrong person in the wrong job. Certain positions need first class "people" skills, others extreme technical genius. The fact this guy is the best engineer in the country does not mean he will make a good manager of the engineering department. The fact this woman doesn't have a degree does not mean she can not be the best Human Relations manager in the country. Where an Owner or Chairman of a Board, thinks his bank balance grants him managerial acumen, start writing the company's eulogy from now.

Where a Panel looks at paper and not at the person, you can expect a company where the office cleaner knows more about what is going on then the CEO. Mr. Hands has become an icon of mismanagement. Happily, it should be most of his own money that he loses.