Examination of Witnesses (Questions 220-239)
21 JULY 2004
SIR ANTHONY
CLEAVER AND
MR JOHN
BEAUMONT
Q220 Jonathan Shaw: You, Sir Anthony,
described the people that you assembled for this project and it
was a very impressive list. Did you try to find someone who you
could put on the board? Was that the missing piece?
Sir Anthony Cleaver: I think that,
had we had such a person, it would have strengthened our position
and we were in the process of looking for just such a person at
the time things changed.
Q221 Jonathan Shaw: Is the fact that
you did not have that person which was crucial to the success
of the project perhaps why HEFCE came to the conclusion about
the marketing that they did?
Sir Anthony Cleaver: I do not
think that HEFCE had any understanding; nobody from HEFCE ever
asked me about the marketing in that sense, who was doing it,
what structure we had, how they were approaching it and so on.
Q222 Jonathan Shaw: Did you tell them
what you were doing in terms of your quarterly minutes that you
told us about?
Sir Anthony Cleaver: Absolutely.
Q223 Jonathan Shaw: So, at no point did
HEFCE say during their regular meetings with you . . . Was it
quarterly meetings that you had with them?
Sir Anthony Cleaver: No. With
HOLDCO, John had quarterly meetings. I met with Howard Newby normally
once a month at my request for around half an hour, at which point
I gave him an overview of where we were, what we thought the current
issues were and so on.
Q224 Jonathan Shaw: In any of those meetings
during the time that you were in your positions, did HEFCE, or
the holding company, or Howard Newby, say to you "For goodness
sake, this marketing is not working. What are you doing about
this?"
Sir Anthony Cleaver: Quite regularly
when I talked to Howard Newby, we would end up discussing student
numbers and saying that was the key issue and that we both recognised
that that was the key issue, to which my response was that first
of all we need the right courses, we need time to get those arrangements
in place and then I believe we will see the student numbers, but
obviously we were disappointed at the numbers that we had. We
would have liked bigger numbers because that was the easiest demonstration
of the progress we were making.
Q225 Jonathan Shaw: Who selected the
products? Who chose them?
Mr Beaumont: The courses?
Q226 Jonathan Shaw: Yes.
Mr Beaumont: The initial three
pilots were done by—
Q227 Jonathan Shaw: I know about those
but what about the others?
Mr Beaumont: We were the ones
that contracted the remainder.
Q228 Jonathan Shaw: Who chose them? Was
it you? Which individual? It is alleged that it was the two of
you, that it was all down to the two of you.
Mr Beaumont: No.
Q229 Jonathan Shaw: These are important
points.
Mr Beaumont: When courses were
taken to the operating company board for approval, I would get
a sign-off from a number of people in my management team. Firstly,
the finance director who had looked at the numbers in a joint
business plan with the university on the student numbers and so
forth and the cost of developing the course and the cost of replenishing
it. I would have a sign-off from the director of learning programmes
from an academic perspective because there is the whole quality
assurance aspect that went into the Committee for Academic Quality
and we would also have a sign off when we had the director of
business development and director of marketing and sales, both
of those.
Q230 Jonathan Shaw: The director of marketing
and sales?
Mr Beaumont: Yes.
Q231 Jonathan Shaw: Why did the director
of marketing and sales get a bonus?
Mr Beaumont: Last year?
Q232 Jonathan Shaw: Yes.
Mr Beaumont: There was a set of
objectives that we had agreed, not only myself, the HR and—
Q233 Chairman: Let us just stick to marketing
at the moment.
Mr Beaumont: What were the criteria
of the marketing director's bonus? That was put to the Remuneration
Committee and, against those objectives, it deserved 3% and that
was independently reviewed, externally, because it was done after
the HEFCE decision. I have a copy if you would like to see it.
Chairman: That would be useful.[3]
Q234 Jonathan Shaw: There has been criticism
of the marketing. Sir Anthony, you have told us that you could
not identify perhaps the person that you wanted of the calibre
to put them on the board.
Sir Anthony Cleaver: Could I change
that? The situation was that we did not find a single person with
the range of skills experience and the level that would have merited
adding a single marketing director on the board at the point in
time when we were first making appointments. What we were most
concerned about then was understanding the local market, which
is why we specifically chose somebody who had been living in Singapore
who understood that part of the world and who was able to build
for us the local contacts and the local agents' association with
local universities and so on. So, that was the aspect. Again,
this is all a question of building the foundations first and then
driving the marketing. We had just reached the stage—remember
that the spring of this year was the first time that any courses
went second time round and the first time for most of the courses,
so we were just at the stage where we now had a portfolio of courses
and we had built that infrastructure and we now needed somebody
to drive that in terms of marketing. We were ready to do that
and we were in the process of dealing with that issue.
Q235 Jonathan Shaw: Do you think from
the outside looking in and in terms of the number of people who
go on the courses—and I take the point you were saying about
what was going to happen—that it was right for bonuses to
be awarded? Normally—and you have both been in businesses—it
is not what will happen, it is going to be what has happened?
Sir Anthony Cleaver: Absolutely.
Q236 Jonathan Shaw: If you delivered
all these thousands of students, then, fair enough, you get the
bonuses but, if it is a projection—
Sir Anthony Cleaver: Absolutely.
All the bonuses were awarded against defined criteria which were
set in advance and people's performance was assessed against them.
For example, for marketing, one of the criteria was to have in
place competent agents in a number of territories. So, if that
were achieved, that was perhaps 20% of his bonus and it was absolutely
right that he should be paid that percentage. In the same way,
the bonuses that were paid to John Beaumont and myself were based
on specific numeric objectives agreed in advance by the Remuneration
Committee composed entirely of non-executive directors with wide
commercial experience who looked at the targets and said, "Yes,
for this year, those are the things that are realistic for you
to achieve. If we achieve those, they will in turn provide the
foundation on which we will build in the future." I have
absolutely no qualms about either the process or the outcome of
the bonuses. Incidentally, they were recorded, just for the avoidance
of doubt as to visibility. The first year's bonuses are fully
recorded in our annual review which was widely published and sent
to all universities etc. So, the suggestion that this came as
a surprise to anybody I find unusual.
Q237 Jonathan Shaw: Well, it came as
a surprise to this Committee and, from my recollection, when we
were last interviewing Sir Howard Newby and the Chairman of HEFCE,
it came as a bit of a surprise to them.
Sir Anthony Cleaver: Perhaps I
should leave you a copy of the annual review in which we published[4]
Q238 Jonathan Shaw: Did they ever discuss
this with you? Did they say, "Goodness me, you only have
about 900 students. It is all very well you talking about English
at your Fingertips and doctors.net or whatever, when you have
the bottoms on the seats, perhaps you can have some money"?
Did they say that to you? Did they raise any concerns about that?
Sir Anthony Cleaver: No.
Q239 Jonathan Shaw: None at all?
Sir Anthony Cleaver: No.
3 Note: Not printed. Back
4
Note: The Foundation Year: UKeU Annual Report 2002-03. Back
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