The future of our world and our society are in flux. Traditional values are being questioned and inequality is evident everywhere – from third world states to Board room tables.
I believe Board rooms across the nation have a responsibility to address some of these issues and to support economic growth which is inclusive and fair to everyone.
After all, strong businesses creates jobs. And more jobs means more tax receipts to sustain our people, public services and communities.
Without strong business our progress is slowed and UK competitiveness falls behind.
The business vote
In years gone by, General Election campaigns used to involve politicians of all colour canvassing for support from business leaders. This election is notable for its lack of business involvement.
To me this is one of many signs of our changing times – which can be traced back to the beginning of the financial crisis in 2007. Before 2007, some business leaders were lauded as ‘Masters of the Universe’.
Their ability to create wealth was seemingly unstoppable and created economies that were driven by a few successful business men – for they were predominantly male – whose focus on delivering the bottom line at any cost made them characters later epitomised in films such as the ‘Wolf of Wall Street’ and the ‘Big Short’.
Such tales of decadence and worse make salacious viewing but create a perspective of a Bacchian society of which none of us can be proud. Before I became CEO at Virgin Money, I saw first-hand what the pursuit of profit and shareholder value – to the detriment of everything else – can do to a business.
When things are going well you can do no wrong – the Masters of the Universe are untouchable, feted by the media, staff, investors even competitors. But if you only focus on shareholder value, such success is not sustainable.
The financial crisis saw some bank share prices eroded to almost nothing. Ordinary shareholder pensions and savings were destroyed. Job security was lost – and for our society trust in some institutions was eroded – literally overnight.
Back then Virgin Money tried to save Northern Rock and enlisted Sir Brian Pitman, former CEO and Chairman of Lloyds Bank, to help. Initially he was reluctant to get involved.
When I asked him why he had a change of heart he told me that, during the miners’ strike, Northern Rock forgave the strikers their mortgage repayments. And he thought, a bank that behaves that honourably deserves to be saved.
It was an epiphany for me – it gave me heart and it is a lesson I will never forget.
At the same time, Virgin Money was growing and I knew that I did not want to lead a business with a win-at-all cost attitude. I didn’t want to focus on the bottom line exclusively. Instead, we decided that our ambition was to make ‘everyone better off’.
We call it EBO and it means we try to balance our decisions and our business rewards – between customers, colleagues, local communities, our business partners and our shareholders.
And it works. It has enabled us to have the business success that we have enjoyed since we bought Northern Rock on 1 January 2012.
I truly believe that businesses that focus first on values, drive sustainable shareholder returns more effectively than those that concentrate solely on the bottom line. In short, good business is not only good for business but good for society too.