Breaking the business mould at Gentoo
Katie Jacobs, October 22, 2014
Peter Walls, CEO of social housing group Gentoo, is fighting back against miserable workplaces, one employee at a time. He explains why business must bring out the best in people and prioritise values if it wants to win back public trust
When Peter Walls talks, it’s hard to keep up. The CEO of North-East social housing organisation Gentoo Group, and winner of most people-focused CEO in the public or non-profit sectors at this year’s HR Excellence Awards, might look relaxed (sitting back, feet up on a chair), but his thoughts move at breakneck speed.
One minute quoting management guru Tom Peters and waxing lyrical about chaos and disruption, the next philosophising on generational differences and grabbing a remote control to act out the trouble some older workers have with technology, it’s a dizzying performance. It’s easy to see why his 1,900-odd workforce sees him as inspirational (the comments from employees were one of the reasons our expert panel of judges placed him top of a strong category).
It would be easy to call Walls a ‘character’ and leave it there, but to do so would be to grossly underestimate his sharpness and drive. “As a person, as a leader, who am I?” he asks himself. The answer: “I’m a bit of a butterfly. I’m both transactional and transformational.”
He continues: “One thing frequently said of me is that I have an absolute belief in the perfectability of humankind. Sometimes it lets me down, but I believe we’ve all got talent and potential. What happens is either the organisation can make you give all you’ve got, or it can frustrate you delivering it, and you take ‘me’ off at the door and become this strange, bored person at work. I need my people firing at more than 100%; they’re not going to change someone’s life if theirs is pretty bloody miserable.”
Gentoo is all about changing lives for the better. The organisation was created in 2000, as Sunderland Housing Group (it rebranded as Gentoo in 2007), having been spun off from the council. Walls says he’s been “lucky” to stay in the same place long term and “influence the shape and nature” of the organisation. And there’s a clear sense that Gentoo, which provides services including social housing, construction and care to those who need it most, has moulded itself to fit the personality and leadership style of the man who’s led it for the past 14 years.
He’s been “empowered to go for it” – a relentless focus on culture – by a supportive board and council. Why? “Because it worked. If I’d been riotously unsuccessful, we wouldn’t be practising my culture. Culture is a product of success and success is a product of culture.”
Gentoo defines itself as a social business, and Walls is determined to make sure the organisation’s activities are founded on the social entrepreneurship principles of profitability, sustainability and growth. Adhering to this vision includes running initiatives such as offering apprenticeships to young people and helping small local firms to compete for contracts. Walls has even developed a new product, Genie, which attracts new investment into an austerity-struck sector by helping people buy a house without a mortgage or deposit. Instead, they enter into a long-term contract, buying shares in the home every time they make a monthly payment. “We are not doing CSR; it’s who we are,” asserts Walls.
He quotes Maslow and the need for ‘self-actualisation’ (the desire to accomplish all one can and become the most that one can be) in helping Gentoo achieve these goals. “We see ourselves as self-actualising people, in a self-actualising business, creating a self-actualising society,” he explains.
A harder aim is translating that message for deprived communities, not that Walls will give up on trying. “If we could get communities to believe our values, what different places they could be,” he says. “Could we get impoverished communities in Sunderland to believe nothing is impossible? They believe pretty much everything is impossible. Our vision is about changing the dynamic, through co-creation, and getting people to trust our business.”
Trust continues to be a major issue, for all organisations. The latest Edelman Trust Barometer shows that globally only 58% of people trust businesses (although this is slowly rebuilding from the nadir of 50% after the financial crisis), and only 44% trust governments. In Walls’ words: “All the pillars of society are a bit suspect; we’ve learned to trust nobody.”
To fix a system he believes is “broken”, businesses must reconnect with their purpose. “I think 21st century businesses are going to trade on purpose,” he predicts. “Values and culture are going to be their economic advantage.” As “the single largest constituent in society”, business needs to take significantly more responsibility for the good of wider society.
“It’s not about philanthropy; it needs to be structurally in-built,” he continues. “A business without that over-arching purpose will often do badly – that’s why we had horse-meat in supermarkets. We have to pursue the burden on businesses to act in a more equitable and ethical way.” Walls himself this year received the prestigious Prince’s Ambassador Award in the Business in the Community (BITC) Responsible Business Awards. He is one of the Prince of Wales’ ambassadors for responsible business, representing the North-East.
Acting with purpose should also serve to attract the younger generation. Survey after survey confirms that those classed as Generation Y care more about the wider purpose of a business and what it contributes to society, and Walls agrees. “Young people are demanding businesses to be a certain way,” he says. “If we have unethical or unfair behaviour in our practices or procedures, more and more young people are going to say, ‘that’s not for me’. If you can crack it, it’s a talent magnet.”
Of course, working in the housing sector, Gentoo has a natural advantage when it comes to understanding the importance of purpose. “At its heart, our sector started from social justice,” says Walls. But that doesn’t mean it can simply assume the values of its people are aligned with its organisational ones. In fact, the focus on cultural alignment is constant.
To help maintain that focus, Walls has ‘split’ his HR function into two: an executive director is in charge of talent, culture, vision and people strategy, while a more transactional department focuses on “keeping us safe” – legislation, contracts and the like. “The word ‘HR’ is an understatement, which is why I’ve shifted it a bit,” he explains.
When it comes to cultural alignment, HR can help “big style”, he believes. “I want to make it clear, that if our culture is not for you, don’t worry about it – you’ve got every other company in the world to work for. That’s a polite way of saying: we won’t have people who sit outside our cultural alignment. We can’t have too many people leading different orchestras in a values-driven business.”
Recruitment, training and performance management are all vital. All leaders are assessed on their cultural alignment as well as their performance, and authenticity is key. “You can’t pass this, ‘I’m your best salesman but I’m a pig to work with’ line,” says Walls. “I expect leaders to be role models, implementing and insisting on culture. It’s unacceptable at that level to be under-performing in culture and behaviour – if you’re doing it, they [staff] are doing it.”
If leaders are not performing, the first strategy is developmental. They are given a “prescription” and a year to ensure their peer group sees a positive change. Sometimes, although rarely, people might struggle to accept this, and then Walls steps in personally, with a process of “re-engineering”.
“If I find you stuck, I will give you the chance to re-engineer your personal constructs and its connections to your duties,” he explains. “For some people, it takes more than psychometrics or a bit of coaching. They can go through the coaching, but when they go back to work, something kicks in like red mist. This cyclical issue needs addressing and I will help get people back in the zone and give them a chance.” He has done this three times successfully, in partnership with an organisation that also specialises in working with at-risk youth, for leaders who were “failing miserably, looking for the exit” but who were ultimately “good people”.
Often, problems come when people stop learning. “Largely because of my boredom threshold, we have remained a learning business,” Walls says. “When you see dysfunctional people in my business, particularly at higher managerial levels, you invariably find they thought they could stop learning. It doesn’t take long. The way the world goes, in an instant you’re out of touch.”
The sheer pace and unpredictability of change is troublesome to many business leaders, but Walls appears to take it in his stride. “The world [used to be] about managing the chaos,” he says. “Now, it’s: if it’s not broke, break it. We’re living in a disruptive age.”
One thing Gentoo is just getting to grips with is the potential disruption that comes with a wider range of generations in the workplace. Both ends of the age spectrum need to be considered. Walls says an increasing number of staff over 65 are now choosing to keep working. In contrast, youth unemployment in the region remains high; earlier this year it was reported that one-in-four young people were unemployed in the North-East.
“We can’t employ everyone in society between the ages of 16 and 92,” says Walls. “We’ve got to give up somewhere – there aren’t enough jobs. My question is, could we create a great option for people at either end of the spectrum?” He suggests older people who want to retire but still use their skills should be given the chance to “deploy themselves without the need for a contract of employment”. “I’m picking up feedback that people are starting to recognise they have a spare 20 years,” he continues. “They might have their pension, but they don’t want to vegetate. We can help them use their time effectively.”
For younger people, he is passionate about the importance of work experience. “I cannae give them [all] £20,000 a year, but I can help prepare them so someone else can employ them.” He adds that Gentoo is the only organisation in the area that will give young people from a local special needs school work experience. “The experience for our staff is mind-blowing; they love it.”
This brings us full circle back to the responsible business debate. Walls says that while many other organisations are doing “an awful lot of good work”, there’s a general perception, in the private sector especially, that “this is messy, difficult and anti-bottom line”. But that is not a sustainable attitude to have, he warns: “Natural selection will bring companies to the 21st century, one way or another. They will either come voluntarily, or become relics of the 20th century.”
He tells a story about speaking to a senior executive from a large private sector company about this issue. “He said: ‘We always ask ourselves three questions. Should we? And the answer is always yes. Could we? Yes. Would we? No, because we don’t think our shareholders will go for it.’ I said: ‘That’s a luxurious position to be in now, but the day will come when people won’t work with companies like that, and your shareholders may have to bear the brunt of that decision.’”
It’s perhaps no surprise he says some of his peers think he’s a “mad heretic”, while others call him “influential”. But it’s clear he couldn’t really give a monkeys. He’ll just keep on doing his thing, and his business, and wider society, will continue to reap the rewards.