Following on from my post yesterday, I’ve been reflecting more on what it means to work in the private sector. And here are my thoughts, for what they are worth.
My career started nearly 40 years ago in the City of London financial institutions. The private sector. One of the most ruthless elements of the private sector it has to be said. I remember one of my colleagues calling in sick one day after our boss knew they had been out drinking the night before. Our boss kept his office door open when he called my colleague and swore and shouted down the phone to him that, in effect, if he didn’t get his backside into the office pronto, he was sacked. It was a warning to everyone – don’t phone in sick with a hangover or you’re out. And I have never, in my entire career, called in sick with a hangover no matter how bad I have felt! I didn’t even miss a class at university with one! The drive was around making money regardless of the circumstances. We capitalised hugely on sterling falling out of the then Exchange Rate Mechanism, for example, when interest rates went up to ridiculous amounts in the period leading up to the fallout. No one questioned whether this was ethical or not, it was just a case of sit there and make money. The drug culture was rampant (though I swerved that one) as was the drinking culture (which I didn’t swerve). The misogyny was off the scale but it was something that was never questioned. As a woman you just accepted it, got on with the job. The pressure was huge, the stress immense and while the compensation was good it didn’t really make up for all the grief that went with the job. It was wholly unrewarding which was why I ended up leaving after 5 years and going to university. So, I liked to think I had experience in the private sector because it had been a cut-throat and stressful experience. That I had cut my teeth in business.
I flirted with the private sector again over the years, always in large institutions, as well as the public sector and the joint private and public sectors where they came together to work in partnership. Apparently. I have, in essence, worked with very large organisations my entire career and thought I knew the private sector well. Well enough to lecture SME’s on business support and advice. A bit like the large organisations.
I remember one project where we were linking businesses in a geographic area together so that they could network with each other and so that the large public and private sector organisations could know what was in their vicinity and trade with them. The networking was a great success and the businesses did a lot of business with each other either teaming up on projects or B2B trade with each other. The public and large private sector bodies? Useless. Utterly useless. We were offered by one large private sector organisation a ‘day of volunteering’ by members of staff to enter the SME’s and train them on, say, marketing. I laughed. Literally. Even then I knew that the last thing an SME wanted was some corporate-type come in and lecture them on how to market their business when they had no idea what it was like to run a business.
Because the truth is, there is a private sector and then there is a private sector. There is one where you are employed and cushioned from the worries of the private sector, even as a CEO. And there is one where you are the employer where the weight of the world is on your shoulders.
As I reflected on the debacle that is HSBC, I wondered if the Group CEO really knew what it was to run a business. Oh, he clearly knows how to restructure a business and how to line the pockets of his shareholders, but does he really know what it’s like to run a business? Does he know what it is to lie awake at night being personally responsible for the wages – the livelihoods – of his staff? I doubt it given how many he has likely made redundant over the years. Does he know what it is to lie awake at night worrying about how to pay the suppliers because cashflow is tight? Because the large corporations you’re working with have you on, at best, 60 day payments? Some 90 days? And, the latest, where they’re trying to push SME’s to 120 day payment terms. Does he know what it is to lie awake at night churning over in your head if you’ve done the Tax is Digital VAT return correctly so you don’t incur penalty points and a fine? Does he ever wonder what on earth the accountant is doing to possibly charge so much? Does he lie there thinking about business development and how to grow the business while balancing that growth with the need for more infrastructure such as, perhaps, more staff or a new lorry? And how that will be afforded?
Now, I am sure he does lie awake at night worrying about some things. Worrying about the share price because it will upset the shareholders if it isn’t going in the right direction. Maybe thinking about the latest ‘efficiency drive’ he can implement to give – who exactly – the confidence to keep the share price where he needs it to be to keep his job. Perhaps how he can maximise profits so that those precious shareholders have their return. But, does he worry about the businesses his practices put out of business? Because, frankly, there will be many. Does he worry that the nonsensical and needless bureaucracy someone in his organisation has put in place is going to cost him business? Yes, maybe only the minnows to him but ultimately, collectively even the minnows can end up being a shark. Piranhas are small fish but can be deadly.
This is the latest from HSBC. We have had to enter into a Factoring Agreement to ensure cashflow while the bank has our business account frozen after my father-in-law’s death and while they have done nothing in the 3-4 weeks since they were notified to progress unfreezing it. We have put up against that agreement a suite of invoices from our largest customer who also banks with HSBC. And the bank has decided to question why we have done this before processing another company’s payment to a different company. There was a suggestion they might want to see the Factoring Agreement. That’s a hell no. So, apart from the fact this is highly intrusive and absolutely nothing to do with them vis-a-vis this transaction, it is actually because of their inaction and needless bureaucracy that has put us in the position of needing to enter into the Agreement. You seriously could not make this sh*t up. To say I am at the end of my tether with the banking industry I, ironically, began my career in is an understatement.
My husband has two main philosophies in business for success, both from his grandfather who started the company in 1949. One is that he would rather have a million small business companies than just a handful of large ones because if you lose one of the small businesses, you don’t notice it and they can usually be replaced whereas if you lose a large one, it’s potentially catastrophic and far more difficult to replace because there’s fewer of them. And the other is to make sure when you do business with another business, that business can prosper in the trade too. Because then they will come back and do business with you time and again which is the lifeblood of success. The banks don’t seem to share either of these philosophies at all. They are only interested in the big businesses and they don’t care if you don’t prosper in the trade as a small business. Because they don’t actually care about your business. It’s the same with high net worth individuals and the average Joe on the street I imagine.
And yet…as I say, piranha are small fish but in a swarm they are deadly. There are relatively few Tier 1 and Tier 2 businesses. There are also relatively few high net worth individuals. There is, mercifully, only one Elon Musk but there are plenty of budding or aspiring ones. Why don’t the banks nurture them? They’re average Joe’s on the street with a small business, and while they may never reach trillionaire (on paper) status, or even billionaire status a good few will reach millionaire status. There are 5.7 million SME’s in the UK. Between them they employ 60% of the UK private sector workforce and generate £2.8 trillion in turnover. Numerically, the vast majority are micro businesses (5.3 million) with 220,000 small businesses and 38,400 medium-sized businesses. That means that the Tier 1s and Tier 2s (of which there are 8,300 in the UK) employ less than half the private sector workforce and have a turnover of £2.7 trillion collectively. Less than half the employees and £0.1tn less than the combined total of SME’s. So, SME’s employ more and are numerically bigger than the big businesses plus collectively have a larger turnover.
Imagine what those figures could be if the SME sector was genuinely looked after. Imagine what those figures will be if the institutions supposed to be in support of them – government both central and local, banks etc. – carry on as they are doing. And the impact on the wider UK economy as a result.
There is no appealing to the better nature of the banks or even government. They’re self-interested and look after themselves (most shareholders are Tier 1s and pension funds which spin out of…Tier 1 financial institutions) ultimately. But as I say, in a swarm piranha can be deadly. I wonder what would happen if all the SME’s who bank with a certain bank came together and decided…no. We’re going to another bank. One of the newer ones that all operate online but yet seem to have far better customer service and real people to speak to. What if they swarmed off the ‘high street bank’ and went elsewhere? What would happen to the share price then?
While I like that idea, really, I’d love to open an ethical bank that seeks to put its customers at the heart of everything. I wouldn’t want the institutional investors anywhere near it. I would want to reinvest profits back into the business to help my customers to grow as businesses themselves. To provide savers with a decent interest rate so they could see their hard earned money make money. I wouldn’t de-bank anyone because I’ve decided my opinion is more important than theirs, even if I do disagree with their opinion (obviously there are exceptions to this, I wouldn’t tolerate fraud or illegal activity). Those who are struggling financially, I would want to be able to help rather than push them down further until they sink whether they’re an individual or a business. I would want to see all customers come together to help others from a networking perspective, sharing their own experiences and what they did to overcome difficulties. Yes, a coming together of people. What would the media do with that idea? Ridicule it. Why? Because we aren’t allowed to come together and help each other. We might realise our own power that way, and that is now allowed to happen.
When piranhas come together, they are deadly even for things far larger than themselves individually. Is it time we became piranha?
Louisa Simpson 