Businesses need to take a square out of Green and Black's bar?

Jo Fairley, one of the founders of the chocolate brand Green and Black, spoke at the Kirklees Business conference yesterday about how the business evolved "one square at a time". One of the keys to the company's success was her uncompromising attitude to customer service which involved personally picking up the customer service phone which was on her desk, listening and talking to customers, gaining direct feedback about her products, both good and bad, and then taking the appropriate action.

Within today's fast moving and frenetic business world, leaders surely need to give priority to listening to their key stakeholders to get the feedback that can help shape the future success of their companies. As Jo Fairley said, leadership is about communication, listening has a key part to play as well as "conjuring up a vision as to how your product makes the world a better place".

This suggests that direct contact with stakeholders provides valuable opportunities to both hear and inspire and should possibly be higher up the leadership bar?

You could have a lot to lose: the importance of treating employees fairly

A study produced by the ACE Group showed that c75% of senior risk executives in the luxury goods industry stated that reputation is their company's greatest asset and 80% agreed that reputational risk is the most difficult individual risk category to manage.

These luxury goods companies, along with those operating in the mass market, are likely to be busy managing cyber and environmental risks for example but the main risk to their reputations is much, much closer to home: their employees. The greatest damage to these companies can come from employees behaviour either simple human error or negligence or deliberate misconduct.  For example an employee at Morrisons stole payroll data of almost 100,000 employees and posted it on a website. It is therefore vital for all organisations, if they want to engender trust and ethical behaviours in their employees that they start by treating them fairly. This approach includes diversity of  opportunity, on-going learning and development, fair terms and conditions etc etc. If reputational risk is now going up the corporate agenda then this surely has to be good news for employees and other stakeholders?

Putting more women in charge is the key to a better future for business?

"Can women fix capitalism?" is the title of Joanna Bush's article in September's Mckinsey Insights. She imagines a future where women " replace capitalism's relentless push for ever-increasing short-term profits with long-term value for all stakeholders". But this isn't a sexist view because she aspires to something better "where men and women lead as equals delivering meaningful impact over the long-term".

However, she is propounding that the feminine archetypes of leadership could be the answer and in her research looks at women leaders who both love working at the top and have a life outside to help shape a new leadership approach that actually values feminine qualities. She calls this "centred leadership" and this it is what "centred leaders "do:

• lead from a core meaning by tapping into strengths and building shared purpose, with a long-term vision for positive impact
• reframe challenges as learning opportunities by shifting underlying mind-sets to replace reactive behaviour patterns
• leverage trust to create relationships, community and a strong sense of purpose
• mobilise others through hope,countering fears to take risks and act boldly on opportunities
• infuse positive energy and renewal through deliberate practice to sustain high performance.

 The research showed that these were the minimum factors for a distinctive leader and that the qualities resonated with men, The suggestion is that if centred leadership was embraced by both men and women it could be a game changer transforming business into more "conscious capitalism" with long term value and sustainability key. A new way of engendering ethical behaviours, fair treatment and trust.

Wonga's loan write-off shows treating customers badly doesn't pay

The FCA has recently taken over responsibility for payday lenders and yesterday forced Wonga to write-off loans and interest to 375,000 customers who should never have been targeted. Andy Haste, the new CEO said Wonga had been "more concerned about the loan outcome than the customer outcome" as money had been lent to people who could never afford to repay. It is another clear example that short-term, unethical behaviour and unfair customer treatment is not sustainable long-term

This is going to be a major wake-up call for the payday lenders as the FCA imposes its "treating customer fairly" (TCF) policy where, among other things, making sure that products and services are appropriately targeted and understood by customers has to be proven. The focus on "customer outcomes" rather than just financial return is a big ask for many in financial services and the payday sector is going to need a major mind-set change to get even close to the requirements of its new regulator. Let's hope the new CEO can make haste with the changes.

New Governance Code Encourages Focus on Long-term Value Creation

A new version of the UK Corporate Governance Code comes into force today for listed companies with accounting periods beginning on or after 1st October.

A noticeable and encouraging emphasis within the code is about Boards managing for the longer term and the sustainability of value creation.  Remuneration for Board members will reinforce this longer term commitment by aligning rewards with sustained value creation, important aspects bearing in mind the increasing number of shareholders voting against their board remuneration policies this year.

In addition, Board directors will be expected to lead by example encouraging good behaviours across their organisations, the so called " tone from the top," (something that might already be expected of leadership).Hopefully, as the FRC (Financial Reporting Council) behind the new code also emphasises the need for more constructive and challenging debate aided by greater board diversity (including gender, race, approach and experience) a new breed of more varied, enlightened and ethical individuals will start to lead our major companies helping to rebuild public and consumer trust in big business.

It’s a safe bet that responsible gambling advertising alone won’t be effective.

Today 4 gambling companies, William Hill, Ladbrokes, Coral and Paddy Power, advertised that they would be advertising “responsible gambling” from 1^st October with new campaigns in the new year.

The problem with advertising is that, because it is expensive, it can be mistaken for a serious attempt to address an issue. Too often it is used as a quick, visible and short-term tactic to address a problem rather than an important and integral part of an overall marketing strategy.  This action could be seen as a promising move for the protection of vulnerable customers such as children if the advertisements were just a small part of a committed and integrated action strategy to change culture and ethical behaviours across all four companies.

Undoubtedly the stakes are high for these companies following the outrage expressed by government and the public at their exploitation of the vulnerable in the last few years, resulting in changes which have decimated their profits. Maybe they are more sincere about deep-rooted change and only time will tell.  But it is highly improbable that their cultures have changed so quickly and if the advertisements are “it” without changes in the leadership vision, values and actions over the long-term (perhaps replacing Paddy Power’s so called “Head of Mischief” with "Head of Responsible Business" for example) it is a pretty safe bet that the actions will not help vulnerable customers; but they might just reduce some of the heat on the sector which is presumably their real game plan.

Warning:10 is the average for children to start buying on-line

According to research conducted by the charity Pfeg, the personal finance education group, 10 is the average age that children start to purchase items on line. It is therefore just as well that financial education starts to be embedded into the maths and citizenship curriculum at schools this month in an attempt to help people manage their money better.

However, Business also has a responsibility in ensuring there is no exploitation of vulnerable customers such as children when it comes to money management.  And if they don’t there may be a big price to pay for their unethical behaviours as we have seen recently when Google agreed to refund c$19 million dollars to parents whose children ran up enormous bills by downloading apps from its Play store without their parent’s authorisation (an amount imposed by the US Federal Trade Commission).  Some of the children who downloaded apps went on to incur large bills through in -app purchases.  

Google is accused of allowing the purchase of items without a password and of not displaying information about charges. It has agreed to change its billing procedure so that it obtains the consent of the consumer before charging.  This is another example of poor behaviour damaging reputation and the need to engender a culture of fair treatment and transparency of operation to build trust.  Hopefully the new curriculum, which includes learning through financial games, will help to engender more savvy teenagers and adults, equipping them to deal more effectively with the increasing complexities of technology where privacy, implicit consent and big data are now fundamental parts of the digital game.