RT Tanner & Co Ltd

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Contents
Conclusions
Operations
Accounting Systems
Trading Performance
Review of Balance Sheet
Future Prospects
Appendix

Bank Report

3 Management

3.1 Introduction
We show, at Appendix B, an organisation structure chart for Tanner showing the deployment of the 105 employees and directors. As the chart indicates there are split reporting lines for sales representatives at Leeds and the Dartford warehouse operation. In our opinion, the Company would benefit from establishing clear single reporting points.

3.2 Directors and Senior Management
a) A Derek Tanner, Chairman
DT has been involved with the business for over 60 years and is regarded somewhat as a luminary in the industry being a past chairman of the Envelope Makers and Manufacturing Stationers Association. Whilst he retired from the position of managing director in 1985, DT still attends the business four days per week and retains control over invoices received and payments made by the Company.

b)Peter D Tanner, Managing Director
After achieving an HND in business studies, PT joined the Company in 1975 and was initially employed in the offices based sales support team. Two years later he was appointed to the position of a sales representative before returning, after a similar period, to manage the installation of a new computer system. He was later involved in upgrading this system from which he became responsible for credit control and later assumed the duties of financial director on the retirement of the existing job holder. He was appointed to the Board in 1983 and has been managing director since 1985.

In his role as managing director, PT regards himself as being responsible for the operations of the Company as a whole including the formation of the future policy and strategy. He emphasised that this latter aspect was strongly influenced by Board decisions and he saw his role as being the practical implementation of the direction set out by the directors. In practice, he has direct responsibility for the management of the Company’s financial affairs with the assistance of DT.

During the last two years, PT has been heavily involved with the legal claims arising from the roof repairs and, latterly, the problems associated with the new computer installation. These have created increasing demands on his time. For the immediate future, PT envisages that the Company’s survival is the key issue following which, it is his ambition for Tanner to move forward with profitable trading restored.

PT envisages that his future lies with the Company. He wishes to see profitability growth but would not want to see the close family control diluted.

c) Mike I Kerlogue, Sales Director
MK commenced his career with Wiggins Teape as a management trainee and during the five year scheme gained experience in production and sales. He joined T V ford, specialists in blotting and filtration papers, as a representative with responsibility for the south of England. MK was appointed to a similar position with the Canadian based business, Dominion Tar and Chemical Co, in 1971 and three years later was promoted to the role of deputy to the regional director. Prior to joining Tanner in 1978, MK was involved in the establishment of a new site at Hemel Hempstead. He initially undertook the role of commercial manager for the Company and was appointed to the Board in 1983. MK is a member of the Institute of Marketing.

MK describes his role as being the control and motivation of the Company’s sales force including the representatives based in Leeds. He also has overall responsibility for the efficient running of the warehousing operation at Dartford, a portfolio of major corporate customers and all marketing activity for Tanner. During the last 12 to 18 months, MK has played the leading role in developing new business opportunities in Europe and he envisages that the Company will be able to secure profitable growth from exports.

d) W Gwyn Rosser BSc, Production Director
Having achieved a degree in chemical engineering, GR was initially employed by the Atomic Energy Authority in a research role. After five years service, he lectured in chemical engineering at Reading University for a similar period before being appointed to the position of Technical Training Advisor for the Paper, Printing and Packaging Industry Training Board. During the ensuing eleven years, he was responsible for the production of a number of training and industrial relations publications and was promoted to the role of Central Training Services manager. He joined Tanner in 1979 and received his Board appointed four years later. During his service with the Training Board, GR attended a management course at Ashridge Management College and is in his third term as chairman of the Envelope Makers and Manufacturing Stationers Association.

As production director, GR regards himself as being responsible for the overall management and control of the manufacturing process. He provides input to the Company’s policy and is directly responsible for all industrial relations matters and negotiations. GR believes that the Company is capable of achieving profitable trading but considers that the preparation of a strategic plan is imperative.

e) Other Directors
We did not meet Bill Pearson, the director responsible for sales and warehousing in Leeds.

3.3 General
Our review indicated that there was an adequate level of expertise within the business to support the directors in day to day operations with the major exception of finance. PT has overall responsibility for financial matters but, in our opinion, the accounts manager does not possess the qualifications and experience to provide the required level of support. Given the heavy demands on PT’s time, we consider that the financial management of the Company should be strengthened, possibly by the appointment of a qualified voice at Board level.

There is, generally, longevity of service within all areas of the Company. Whilst not wishing to detract from the positive benefits of such a culture, we consider that change becomes more difficult to achieve. This is exemplified by the sales force which has an average age of 52, with the eldest being 63 years of age. Management was of the view that, being financially secure, the representatives were not motivated by incentives or bonuses and consequently it appeared that difficulties have been encountered in seeking greater efforts. In our opinion, management may need to resolve this situation to sharpen the focus of selling.

Our discussions indicated that middle management possessed a range of sensible views on ways to improve the Company’s performance. As discussed at para 8.2, we consider that a corporate plan needs to be developed and, provided that this is communicated effectively to the management team, it is our belief that a clearer focus on objectives will be achieved.

Board meetings appear to be convened on an “ad hoc” basis to discuss issues facing the Company. These are supported by other meetings in various departments.

3.4 Conclusions
This family business has longevity of service of staff in virtually all areas of the business. Whilst acknowledging the positive benefits of such a culture, we consider that this has not been conducive to the achievement of change which has been perceived by management.

There is substantial experience within the business and a high degree of loyalty but, in our opinion, there is a lack of positive direction to the management’s efforts. We formed the impression that this has led to a lack of cohesion amongst the management team which is poorly structured, with overlapping areas of responsibility.

In our opinion, the business would benefit from a freer exchange of views and the development of a cohesive corporate strategy, particularly longer term strategic and financial planning. The directors appeared to be receptive to pursuing this course. Given the day to day demands of the business we suggest that management may wish to utilise the services of external consultants to develop a business and financial plan. The absence of strong support to PT in the financial management of the Company is, in our view, a major area of weakness. We consider that Tanner cannot now afford to disregard the importance of these skills at the present levels of trading. We believe that a commercially experienced qualified financial voice at Board level will be required to provide appropriate support to PT and suggest that this should receive consideration by management when establishing the way forward.