Many building societies are now converting into banks. Some, like Bristol & West, have been taken over by a bank. Originally founded to build a stable society and prosperous communities, how will the contribute it future?
For a while this summer, it looked as if the end was in sight for the whole building society movement. In the event, Nationwide members decided not to take the money and run. But the issue remains: can the principles and values of a mutual membership organisation still work in today’s economy and society? And for those which decide that mutuality does constrain their ability to serve the customers, how can the values still be applied in a company with shareholders demanding a rate of return?
The members of Bristol & West Building Society reached their own conclusion earlier this year and voted for conversion: on July 28, the assets were vested in a new company, Bristol & West plc, which became a wholly owned subsidiary of Bank of Ireland Group. As well as an average £1,200 bonus plus a holding of non-voting preference shares paying a fixed percentage dividend, former members also received something else: a letter from chief executive, John Burke, inviting them to donate part of their windfall to a new charitable fund.
To be managed by an established trust, the Greater Bristol Foundation, this new fund will make grants to needy local communities across Britain in proportion to the geographic spread of endowment donations. This is one way in which Bristol & West intends to keep alive the strong local connection and the links with members.
Bristol & West is not now attempting to become a bank in its own right but to remain specialists in mortgages, savings and investments only. It is adding to its geographic strength in the branch network other distribution and direct sales channels to reach a growing body of national customers.
Programme review
Even before the decision to convert was taken, Bristol & West had begun to prepare for the challenges of a more commercially competitive financial services market place. A wholesale review and reorganisation of community activities began in 1995, resulting in a detailed development plan for the five years, 1996 to 2000. Today the policy concentrates on education as the top priority and main activity. Also included, with links to education where possible, are:
– support for staff fundraising and other matching of staff effort;
– environment;
– equal opportunities;
continuing with its strategic partnership with Greater Bristol Foundation.
These priorities were chosen only at the end of an exceptionally methodical and business-like process, worth describing in some detail.
At the outset the defined aim was to devise a programme for community involvement which ensured Bristol & West was held in the highest regard by customers, employees and other stakeholders. Underlying this was the belief that the business is interdependent with community: its long term future is enhanced when it enjoys the support and goodwill of all stakeholders.
This was translated into a set of principles which the new community programme would have to meet:
– support for the group vision, mission and values;
– fit with objectives and priorities especially in human resources, sales and marketing, and corporate communication;
– achievement of recognised standards of best practice;
– meeting proven community need;
– transferring skills to the community, not encouraging dependency;
– environmentally responsible.
From this, the mission was defined as:
1. To enhance the status of Bristol & West as an organisation undoubted in its concern for the vitality of the communities in which it operates.
2. To implement a community investment programme which will help to promote prosperity in the community.
3. To create a style of behaviour based on a shared interest in the community, truthfulness and responsibility.
4. To maximise opportunities within the community that release the true potential of people.
Then a full SWOT analysis was undertaken, examining the various programme options and scoring them scoring against the pre-set objectives. At this stage, education emerged as the clear priority.
Programme evaluation
But the review did not end there, as the next stage was to set in place the tools by which programme implementation could be managed and evaluated. The range of possible business benefits were assessed, with four highlighted:
– strengthening the licence to operate;
– better brand familiarity;
– cost-effective development of staff competencies;
– enhanced image.
Finally specific performance targets were set. The overriding target is to increase Bristol & West’s score in the EFQM Business Excellence Model nearly four fold from a self-assessed 20 in 1995 to 75 by the year 2000. Among other key performance indicators were:
– achieving Per Cent Club levels of investment, up from 0.24% in 1995 to 0.5% of pre-tax profit by 2000;
– internal and external perceptions improved, measured through surveys and focus groups;
– staff involvement: 25% of employees to be involved with support from the company, starting from a 4% position;
– positive press coverage (number of articles);
– external awards received, an indicator of best practice.
– The process ended with a detailed implementation plan and communication plan.
Project support
In planning the education support activities, Bristol & West started with a meeting with the director of the local education authority to identify priorities. School governors emerged as a big need and Bristol & West now allows staff up to five days off a year if they volunteer to help. Another need is support for teachers, particularly heads. Now chief executive, John Burke, has been asked to lead a regional effort to get more businesses involved, for example recruiting more mentors for head teachers.
Where possible, a package of support is clustered around one project or links made between projects. An example is Hartcliffe School, located in a disadvantaged section of Bristol. Twelve staff members act as mentors for teachers and for bright but underachieving pupils. A manager undertaking a development assignment to devise a Lottery application for a new Centre for the Performing Arts in Bristol need some market research among young people. The school pupils were trained to conduct the survey. Now another Bristol & West manager is the chair of the Centre’s trustees and the Centre is bringing performances into local schools including Hartcliffe.
This interest in out-of-school activities led to research into its effect on academic performance, conducted by the charity, Education Extra and Bristol & West is supporting national replication. Likewise, a new schools resource pack on the subject of citizenship is being developed, with a web site, responding to identified need by LEA.
Management
The community affairs function is part of corporate communications at the centre, with Mich?le Webber as head of community affairs. A network of ‘champions’ across the business and in local areas is being set up. Charitable donations are decided by a charities committee which meets bi-monthly and also oversees the in-house charitable trust.
Future challenges
Much of the available time and effort in the last two years has inevitably been devoted to conducting the review and implementing the new programme, against a backdrop dominated by conversion. Now that is over, Bristol & West can consider the challenges it faces to achieve the ambitious mission and stay true to its values.
First is the need to deepen and broaden community activities, as the scale of the programme grows. Internally that means really integrating with human resources. Community options are being added to the learning resource manual. Staff who get involved with company support are asked to complete a form identifying the benefits to the individual and the company with reference to core competencies. The next stage is an appropriate link with appraisal. Also internally, the matched giving schemes need to be put on proper footing, rather than the reactive basis as at present.
The second challenge is external, a link with customers, many of whom are former members. Launching the new fund is a start. Cause-related marketing is one possibility, perhaps initially by building loyalty with the existing, regionally strong, customer base; a harder alternative is to address direct sales and the national market place.
Another challenge is, as always, evaluation. For Bristol & West, ahead of many others, that is not so much in devising measures, as in using the results to modify programme in light of responses from stakeholders.
The final challenge is wider still, international. Is the combination with the Bank of Ireland simply a take-over or an opportunity for genuine cross-learning? Corporate community involvement is not yet as extensive or widely practised in Ireland as in the UK. So there could be a role for Bristol & West in offering its expertise, both to its new parent and to other companies. That would be the ultimate in happy endings: the end of a mutual society leading to the sharing of community values with a bank and beyond.
BENCHMARKS:
BRISTOL & WEST PLC
Chairman: Lord Armstrong
Chief executive: John Burke
Net interest receivable: £150 million
Pre-tax profit: £78 million
Employees: 2,300
Year end: December 31, 1996
Community contribution: £188,000
Percentage of profit: 0.25%
Per head staff: £82
Policy focus: education, employees, environment, local partnerships
Flagship projects: 1. Links with local school such as Hartcliffe.
2. Bristol Centre for the Performing Arts.
3. Citizenship resource pack
Employee involvement: encouragement linked to human resource objectives; 5 days off pa for school governors.
Management: part of corporate communications; one full time manager
Contact: Michele Webber, community affairs manager
Address: PO Box 27, Broad Quay, Bristol BS99 7AX
Phone: 0117 943 2248 (Fax: 0117 925 6328)
HALIFAX PLC
Chairman: Jon Foulds
Chief executive: Mike Blackburn
Net interest receivable: £1.9 billion #
Pre-tax profit: £893 million #
Employees: 34,870
Year end: December 31, 1996 (# 11 month period
Community contribution: £1.9 million (#) including gifts in-ind; in addition, £1 million contributed through affinity credit card (#)
Percentage of profit: 0.2%
Per head staff: £59 pro-rata
Policy focus: debt counselling, homelessness, community projects, disabilities, health, education, job creation, older people and environment
Flagship projects:
1. long term support for debt counselling including Citizens Advice Bureaux and Money Advice Trust
2. support for range of homelessness charities including Centrepoint, Crisis, Shelter and the Big Issue
Employee involvement: staff fundraising is matched ?-for-?; community development circles engage teams of staff as a management development tool
Management: within corporate affairs, four members of staff
Contact: Alison Roberts, group corporate affairs manager
Address: Trinity Road, Halifax, West Yorkshire HX6 4AZ
Community contribution: £46,000 charitable donations only
Percentage of profit: 0.06%
Per head staff: £22
Policy focus: education and especially financial literacy, housing and the homeless including debt counselling, community development
Flagship projects:
1. drug awareness scheme for young people
2. homeless projects in core regions of north west, midlands and south west
3. community award schemes to recognise outstanding voluntary contribution by ordinary people, with newspapers in Liverpool, Birmingham, Bristol and Plymouth
Employee involvement: Encouragement to get involved in voluntary work, as school governors and in fundraising; matched funding scheme.
Management: as part of corporate relations team, one person assigned (part-time)
Contact: Fiona Nelson, account manager
Address: Pendeford Business Park, Wobaston Road, Wolverhampton WV9 5HZ
Phone: 01902 023323 (fax: 01902 325602)
Nationwide Building Society
Chairman: Charles Nunneley
Chief executive: Brian Davis
Net interest receivable: £877million
Pre-tax profit: £396 million (restated)
Employees: 11,147
Year end: April 4, 1996
Community contribution: £544,464 donations
Percentage of profit: 0.14%
Per head staff: £49
Policy focus: housing, youth projects including education and training, caring projects including counselling and advice, support for disabled people; heritage/environment including green issues and conservation
Flagship projects: information not supplied
Employee involvement: support given to employee fundraising and GYE payroll giving encouraged
Management: managed as part of corporate affairs
Contact: James McCormick, community affairs manager
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