Nationwide CEO Graham Beale is enthusiastically showing me how Apple Pay works with the building society’s cards on his iPhone. “In five years’ time, most of us won’t be carrying cash,” he says. “It will all be contactless. This is the future, it’s going to radically change the way we behave.”
“I’ve never felt more confident, excited or energised by the future, and things like these apps,” he adds. So, he acknowledges it could come across as slightly contradictory that in May he announced his intention to retire in 2016, once Nationwide has found a worthy successor. “Nine years is a long time to be CEO,” he says. “I know you need fresh eyes. There comes a point where it’s right for you and the business that you have a fresh perspective. This is what succession planning should be – done from a position of strength where the board has the luxury of time and can do it in a healthy and managed way.”
Beale has been with the organisation since 1985, when he joined Anglia Building Society (which later merged with Nationwide). Even before becoming CEO in 2007 he played a major role in modernising the building society. Once CEO, he steered the mutual through the financial crisis without the need for taxpayer support. He announced his retirement the same day Nationwide recorded a 54% jump in profits, to £1 billion. But for Beale his success is about more than just financial profits: “It’s all down to people”. In recognition of this, he was named Most People-Focused CEO: Private Sector in the HR Excellence Awards 2015.
HR magazine caught up with Beale at Nationwide’s offices in the heart of the old City of London to talk authentic leadership, the relentless march of digital and why CEOs need to step out of their “bubbles”…
Technology doesn’t mean the end of people
“Digital innovation is going to turn the way we operate upside-down,” predicts Beale. “This is the biggest revolution we’ve ever gone through as a sector and it’s happening right now. It’s driven by consumers who have been empowered by technology, not the industry.”
But will the increase of automation mean people become less important in the equation, as many fear? Beale’s view is “absolutely not”. “This is effectively automating all that mundane transactional activity it’s easier for people to do at their own convenience,” he says. “That gives us space in the branches to engage in giving people advice.”
Nationwide is in the process of repositioning its branches to focus on the provision of advice and guidance, “rather than mechanically dealing with transactions”. This means deploying people differently and job creation, as people are now required to fill roles that have never existed before. For example, in some smaller branches it doesn’t make sense to employ a mortgage consultant or financial adviser. So instead the mutual is introducing ‘Nationwide Now’, a high definition video link that allows customers to talk live with an adviser. “Technologies like that are breathing life into branches,” says Beale. “That is technology doing the opposite of what most people predicted [making branches obsolete].”
And while you might expect ‘Generation Z’ to shun face-to-face contact and opt to do everything online, Beale reveals that 80% of a new current account aimed at those aged between 11 and 17 have been opened in branch. “Even though the option is there to access our services online, a lot of people at that first point of connection want the support and assurance,” he muses. “There’s this myth that mobile devices will take people out of the equation, but I think it’s doing the opposite.”
He also believes that the proliferation of mobile apps gives financial services organisations the opportunity to increase levels of customer engagement. “People are contacting us several times a day; it becomes part of your life,” he says. “Every time they open that app it’s contact with Nationwide. That’s an opportunity for us to engage, update, personalise… This [gives us] a much stronger interaction than we’ve ever had in the past.”
All this means emotional intelligence is an increasingly essential trait. “The successful people within Nationwide are those who can engage with others,” explains Beale. “It’s all about skilful conversations.” Trust is also critical: “If you don’t have trust, it breaks down. We saw that dramatically when people lost trust in Northern Rock. That’s the worst thing that can happen.”
Being socially responsible counts
Nationwide’s business model means it is beholden to fewer stakeholders than many organisations.
“There’s no one else to satisfy in the equation, just us and our members,” points out Beale. “It might sound a bit trite, but because of that we always try to do the right thing.” And when mistakes happen, “we always try to put them right”. In the last financial year Nationwide only accounted for about 2.5% of complaints to the Financial Ombudsman Service (FOS), and FOS agreed with about nine in 10 of Nationwide’s decisions (the industry average is fewer than five in 10).
Beale personally supports the mutual’s active citizenship agenda, encouraging employee volunteering. This is something he feels is paying off in attracting future talent. “It’s interesting how young people in particular are influenced by what you stand for and your commitment to broader society,” he says. “When I look back at my peer group, I think society has moved on and young people are exercising a much broader judgement about who they are comfortable working for.”
As part of its aim to “do the right thing” Nationwide has committed to paying not only its directly employed workforce, including apprentices, but all its contractors the living wage (£7.85 an hour, £9.15 an hour in London). By March 2016 everyone who works directly or indirectly with Nationwide will be on the living wage. Beale says he is “delighted” with the recent decision by the government to shift the minimum wage closer to the living wage. “The principle should be minimum equals living, otherwise it’s a contradiction,” he adds. “I imagine the national minimum wage and the living wage will morph as a single metric. I don’t accept businesses can’t operate like that.”
Related to this, he reveals Nationwide is exploring the concept of a “living pension” to ensure employees who stay with the organisation end up with a pension they can live on. “With the UK’s demographic profile and people living longer, that is as important as the living wage,” he says. “It’s a big issue we need to face. The living wage is step one; the living pension has got to follow.”
Of course, any discussion of the living wage for those at the bottom end of the scale leads to talking about those at the top. Does Beale think pay ratios would be a useful instrument? “I’m not sure they actually mean anything. What is important is that you are paying levels that are fair and reflect your remuneration policy. We pay based on performance and success. We’re not seeking to lead the field, but whether we like it or not if I need to hire someone to head a function it’s highly likely I will need to recruit that person from the banking community, so I have to pay the market rate. We have to pay to get the right people. If we compromise on that, we could compromise Nationwide. But we never inflate pay.”
Leaders can’t live in a bubble
The HRD judges for the HR Excellence Awards praised Beale’s “hands-on visible leadership”. Talking to him, it’s clear how highly he prizes accessibility and authenticity. With around 17,000 employees he acknowledges it’s “impossible for me to know everyone”, but says he goes out of his way to talk to as many people as he can.
Technology can support this, with Beale filming regular videos for corporate events. “The good thing about video is everyone hears the same message and can interpret my body language,” he says. “That was particularly important at the height of the financial crisis when the world was imploding. People were seeking assurance and it’s important you give the right signals.”
Day-to-day, Beale supplements that communication with more informal points of contact. “It would be easy for me to stay on the seventh floor and never leave. It’s easy to live in a bubble but I don’t believe in that.”
However, this isn’t always the norm among financial services CEOs. “I’ve seen some of my counterparts, particularly in the banking community, arrive and leave by chauffeured vehicle, go in their own entrance, and people don’t see them from one day to the next,” he says.
“When they do a branch visit the red carpet is rolled out. That is not my idea of a branch visit. I go on a normal working day and talk to as many people as possible; about the weather, what was on TV last night. You need to put people at ease.”
He continues: “For me going into a branch is important for a number of reasons. It’s where we do most of our business so I need to understand what’s working or not for our people. Getting that snapshot is hugely important. It would be easy for me to live my life upstairs, but then you’re making decisions detached from how they are playing out. You are much poorer for it if you don’t invest that time, not just in the branches, but in all the functions. We are one chain reaction and if you don’t understand how each of the links in the chain operate, you aren’t going to have the quality of service that you want.”
Beale tries to be authentic in his leadership style, although he acknowledges the need to “reinvent yourself” as you develop. “I am very different today to how I was in 2007,” he reflects. “I am a shy and introverted person and the thought of standing on a stage and talking used to fill me with fear.
“You need to reinvent yourself in a way where you can relate to the audience and issue, but it doesn’t mean becoming someone you’re not. I’m from a relatively simple background and I don’t forget those roots.”
Culture needs investment
Nationwide’s PRIDE values programme has been running for 14 years and is the cornerstone of its culture. The acronym stands for: putting members first; rewarding loyalty; inspiring trust; doing the right thing; excelling at service. “Everyone [in the organisation] will recognise PRIDE,” Beale says. “They may not know all of the letters, but it will be enough that they are onside in terms of what we stand for. They may use a slightly different language to me [when talking about our values], but the meaning, understanding and belief will be there.”
Beale is clear that culture “won’t just look after itself; you have got to invest in it”. This means putting your money where your mouth is, something Nationwide does with glitzy awards events and internal video messaging, which Beale believes is “very powerful in conveying a richer story”. “It’s all of that, year after year so that it feels real, not just flavour of the month,” he says, adding that Nationwide has invested “several million” in communicating its culture and values internally. “You have got to be prepared to believe in it,” he points out.
For other financial services organisations taking long, hard looks at their cultures in the wake of various scandals, Beale has the following advice: “These things don’t just happen. You’ve got to be very deliberate in what you’re setting out to achieve, you’ve got to be prepared to invest and you’ve got to be patient. To genuinely change culture, you can’t do it overnight. You’ve got to get that hearts and minds belief.”
After he retires Beale would like to play a role in helping other businesses improve their cultures as an NED. “There’s such a richness of learning and experience that’s come out of Nationwide,” he says. “You can see some of the cultural traumas the banking community is going through right now. I don’t want to sound arrogant, but I sense if they were prepared to listen they could start to think slightly differently and move their own business models forward.”