David Dickson is the chair of Family Business Matters, Western Pension Solutions, and St. Leonard’s Hospice. He’s also the deputy chair of the York & North Yorkshire LEP, and a NED at ITP.
Here, David reflects on chairing a Think Tank roundtable and lays down a challenge to his peers.
My challenge to business leaders
We live in a world where unfairness and inequality are rife, and where many people feel that the “system” doesn’t work for them. Business — and family business in particular — has a big role to play in changing these views.
I am a shareholder in a family business that was founded 130 years ago in York. The family’s view is that, alongside their duties as shareholders and to their employees, they have a duty to the community that they live in — which got them where they are. Fairness is built into the values of the business. This isn’t unusual for a family business, but it is for others — public or private equity-owned companies, for example — where fiduciary duties to shareholders inevitably loom much larger.
But whatever the environment in which you operate, I don’t think many business leaders would disagree with the notion that a fairer world would be a better world, or that business should play a part in making that happen. The trickier challenge is to identify the barriers to fairness, and what businesses can do to promote fairer outcomes for all.
These were some of the key points tackled in a debate I chaired for the Board Intelligence Think Tank recently. I would love to report that in the space of 90 minutes our smart and insightful panel of business leaders, investors, and governance experts came up with a fool-proof formula for fairness. But the truth is that we didn’t even try, as one thing we all agreed on is that such a recipe does not exist.
What we did achieve was more realistic and more useful — we pinpointed obstacles to fairness, and corralled a few practical suggestions for how any business can weave fairness into the fabric of their culture, just as the best family businesses always have done.
So, what are the obstacles?
- Short-termism. Pressure to deliver short-term returns means that fairness can easily fall victim to the quarterly reporting cycle, or to a value creation plan. By contrast, family-owned businesses have the freedom to take a view over decades or generations.
- Lack of hard data. Fairness is much harder to pin down than old favourites like revenues, profit, and ROI — or even important new sustainability metrics like your carbon footprint. But dodging fairness because you can’t measure it is putting the cart before the horse — if businesses start to act more fairly because it’s the right thing to do, then ways to measure the impact of those actions will emerge.
- “It costs too much.” A few years ago this was the standard retort to calls for greater fairness. But times have changed and this is no longer true — if it ever was. Fairness is a benefit, not a cost. It enhances your reputation and enables you to attract the best people to work for you, and it boosts your brand value, so you can charge more for your products. It’s not why you should do it, but there is commercial value in fairness.
“Fairness can easily fall victim to the quarterly reporting cycle.”
And what are the answers?
- Get involved. Encourage everyone in the business to pitch in and help in their local community. Directors can join outside organisations like not-for-profits and charities and, for employees, volunteering days are a great option. Experiencing aspects of life you don’t normally see is an eye-opener and encourages consideration for the impact of the decisions we make on those around us.
- Look at your incentives. People want to be able to act fairly, and to work for organisations that allow them to do so. But too many bonus, pay, or incentive schemes actually require unfair choices for maximum reward.
- Tell better stories. In a social media age, calling out unfairness has never been easier and the fairness narrative is massively skewed to the negative. But an unremitting diet of bad news is not a healthy one. So celebrate fairness whenever you can — a bit of good news inspires more change more quickly than any amount of finger-pointing.
Don’t get me wrong — I am all in favour of making a decent profit. But even the most dedicated of capitalists doesn’t get out of bed in the morning thinking “Today I am going to maximise my profits.” We all want meaning and value in our work, and fairness is the foundation we build it on. So, my challenge to my peers is to follow the example of family firms, and champion fairness to make a real difference to people’s lives. It’s the right thing to do, and it’s good for business too.
What we learnt by adding a seat to the table
Every Board Intelligence Think Tank roundtable features an unexpected guest, invited to bring a different viewpoint to the conversation. On this occasion, we heard from Lizzie Beale, a youth ambassador.
Lizzie’s questions were an important reality check because she made fairness personal. Would you be happy to live in the communities that are impacted by the decisions your business makes? Would you be happy for your children and grandchildren to live in them? If more business leaders were able to honestly answer “Yes” to these kind of legacy questions, it would be a big step forward in fairness. And if they could say the same for other people’s grandchildren too, it would be a huge leap.
Click here to read the full report on our roundtable findings.