Superwoman destroys the City's star system

Question: What's the similarity between Nicola Horlick and Chris Evans? Answer: They both make more than a million a year, they've both quit their jobs this week after a mighty row with their employers, they've both got above themselves and they were both out of control - quite how much depends on who you believe. That's more or less where the comparison ends, for there isn't much of a likeness in the hair colour. There might be one other thing that unites them, however.

Personnel eruptions of this type tend to take place only in organisations which are on the ropes, in crisis or going through a protracted period of unmanaged change. They are rare, though not unheard of, in orderly, professionally managed companies with an established market position. In both these cases - Mr Evans at the BBC and Mrs Horlick at Morgan Grenfell Asset Management - it is a moot point as to who was most out of control, the employee or the employer.

Hemmed in on all sides by commercial TV and radio, the BBC isn't wholly confident of what it's trying to do any longer and as a consequence it displays all the usual characteristics - drift and clutching at straws. The Peter Young fiasco has produced a different sort of crisis at MGAM, where the story is one of client defections, big losses and plunging morale. Both organisations have none the less become a breeding ground for festering discontent, naked ambition and rampant disloyalty.

Whether it was Mrs Horlick or, as she would have us believe, an unrelated group of disaffected rebels who were threatening to resign, the point to be derived from it all is much the same - when employees start holding a gun to an organisation's head, and find, moreover, that their bravado actually has the sought-after effect, then there has got to be something seriously wrong with the organisation.

Whatever the events that led up to her suspension, Mrs Horlick is perhaps the most striking evidence of this. Very few people, even in the City, earn pounds 1m a year. Hardly any fund managers who do not actually own or are partners in their own businesses do. The notable exception is Tony Dye at PDFM, who once made that sort of money though he surely doesn't any longer. And Carol Galley at Mercury Asset Management comes close. The others can probably be counted on the fingers of one hand.

So what on earth is Mrs Horlick, who was no more than number four in the pecking order, doing earning this astonishing amount? By all accounts Mrs Horlick is an exceptionally talented and clever young woman, but can she actually be worth that to any organisation? Somehow I doubt it. The fact that MGAM was apparently willing to pay it is evidence of a sickness in the City that goes well beyond that of 20 Finsbury Circus (MGAM's City offices).

It's about the individual becoming greater than the organisation, the idea of the star employee without whom everything would collapse. That individuals should think and believe this is nothing new or surprising. But that their organisations should come to accept it too is a quite bizarre and extraordinary thing, a failure in management of the oldest and most basic variety. But then we don't need any reminders about management failure at Morgan Grenfell Asset Management, do we?

Mrs Horlick was a fund manager, no more, no less, and her success, in so far as it could be measured, was built on the good name and systems of her organisation. Even on her own version of events, what happened is a pretty damning indictment of the modern City. Most management is filled with messy compromise but that an organisation can be held to ransom by any group of employees, and do things it doesn't necessarily want to do, is completely ridiculous. What Mrs Horlick claims happened, to precis it a bit, is this. A group of rebels came to her and said that unless she got a position which would give her the authority to pull things back together again in the company, they would all leave. Mrs Horlick, you understand, was an entirely innocent pawn in all this.

So an emissary was dispatched to the boss, Robert Smith, with the message that if he didn't give her a decent job, then they would leave. What Mr Smith should have done was called their bluff, but weakened as MGAM was, it appeared to him that the rebels had the upper hand and he agreed. What happened after that will probably have to be left to the courts to decide. Why the sudden change of heart? Was it, as he claims, a subsequent telephone call in which he was told that Mrs Horlick had all along been planning to defect with the best of her team? Or is it, as Mrs Horlick claims, a question of being treated "despicably"?

Either way the impression is of an organisation in a quite spectacular state of shambles. Deliberate encouragement of the star employee system, what is more, seems to be the ultimate cause. The Nicola Horlick affair hardly bears comparison with the dreadful scandal that preceded it. But is it any surprise that an organisation which allows its employees to run amok in the manner of Peter Young should also suffer a tragi-comic personnel crisis of this sort? And are star fund managers really what clients want these days? I've got my doubts about that too. It often helps on the retail side of the business to attach the name of a top performing fund management group to a product but there is growing disillusionment in the institutional market.

A fund manager who outperforms 4 per cent one year, achieving star status, isn't ultimately much good if he gives it all back the next. What the big pension funds increasingly demand is consistency and reliability. For that you need well-paid professionals, operating within strict investment guidelines and rules, but you don't necessarily need the likes of Mrs Horlick and her pounds 1m pay packet.

That style of fund management will almost certainly persist, but in future it will probably belong more to the owner-proprietor boutiques, to the investment gurus and the high-risk hedge funds. Young as she is, Mrs Horlick may in time come to be seen as a bit of an investment management dinosaur. Her demise could prove a watershed, unambiguously marking the final triumph of a reliable but boring computer-driven, number-crunching style of fund management.

As for MGAM, who knows what the damage might be? It is hard to know what the company's German masters, Deutsche Bank, made of Mrs Horlick's extraordinary flight to Frankfurt last night, complete with a whole entourage of reporters and photographers. But their belief in the City must be more than a little shaken. They must also be wondering what on earth it was they bought when they paid all that money for Morgan Grenfell seven years ago.