To A Coy Boardroom*

by Stoker

Many years ago I worked for a company majority-owned by Hong Kong and Shanghai Bank Corp. (HSBC), that leviathan of east Asian banks, then pursuing a strategy to become the biggest bank in the world. A major objective was to acquire other banks in the USA. Trying to break into the American market has been the downfall of many a business and HSBC was determined not to commit the same errors, but to work out a culture that would enable it to meld American customer-friendly ways with those of a tough Eastern trading bank that had fought its way from a toehold on the China coast to domination of third world markets.

There was a standing joke that HSBC was run by a coterie of Scottish Grammar School boys who wanted a more exotic life. It was no joke; Scotland was precisely where the bank had for generations recruited its senior management, straight from school if possible. “Bank or Army?” was the choice for bright Scottish lads wanting to travel. It gave a certain outlook: hard-working, straight-speaking, dry, Presbyterian. Just the outlook on life that makes for a successful banking business.

Until HSBC began to force its way into Britain, then Europe and the US. That slightly grim, hard-working, hard-drinking culture was a shock to many of those hoovered up in its march for growth. Senior management decided that HSBC must exhibit more polished Western ways and manners. Accordingly, the UK chief executive, an ambitious man of traditional background, told his London staff department that it had to introduce a new culture across all levels and ranks. They went off and got on with it, as was the HSBC way, designing a programme to increase informality, bring different levels and areas closer, and generally introduce a gentler, huggy-feely, culture. Literally, in some senses. When it was up and running it was suggested to the CEO that it would set a good example if he did the course. He agreed, and turned up to a London branch training session. “So”, the trainer said “let’s start with a group hug”. HSBC legend has it that our man did not actually fight off the hugging juniors, but he made a very early excuse to get back to head office and cancelled the rest of the programme for the whole UK.

Which may, as it happened, have saved HSBC from later rafts of inappropriate behaviour claims. Hugging is best confined to those known to us very well indeed, and after glaring out those huggers (usually male), whose hands seem prone to gravitational fall.

But it also demonstrates a more fundamental risk to businesses. Going along with fashionable ways can seem an easy win at the time, but when fashion swings round, accepted behaviours change. When what was right and good turns out to have been wrong and bad, then a business can find itself with real problems. And the dangers of that for business have never been greater in Western democracies than now.

It is of course very tempting to go with the political flow. Indeed, any business that has not responded to, for example, concerns about diversity in modern mixed societies is foolish. Foolish because its customers will know and most want a society that does not exclude minorities. Foolish because its staff will know and resent any organisation that does not give fair chances to all. Foolish if its employment policies do not accord with the law, and to quite an extent, the spirit of the law. And most of all, foolish if it still does not understand that to be inclusive means that it acquires, promotes, and uses the best people to the maximum of their talents.

Around 1987, the City of London woke up to the fact that the talents it needed were not those of a particular class or education or sex or colour, but were of character and energy and attitude. That was triggered by Big Bang in 1987 when changing social values and the liberalising, monopoly-breaking Thatcher government forced the City to scrap fusty old boy habits and reinvent itself to compete in world markets (especially American). Within a short time the City was the prime financial centre of the world; and one of the easiest places to succeed on merit and hard work, irrespective of creed, colour, or orientation. It was one of those happy coincidences where free enterprise, government, and society all had the same impulses at the same time.

That is not the case now. The dominant voices in our on-line society hate capitalism as the work of the devil, citing it as a relentless grinding down of working folk and enslavement in the cause of private profit. Politicians, always trimmers in search of votes, pay at least lip service to these chants (though ‘unconscious bias training’ proved too mad even for the British government to embrace). And worst of all, the tendency is for business to keep its head down and hope this will all go away. In 1930’s Germany there were business leaders who genuinely espoused the Nazi cause; equally there were those who opposed it and stood against the creeping Nazification of every aspect of life. But most quietly tried to find an accommodation with what was happening. Understandably, owners and managers wanted to run their businesses and went with the flow, some more in the main stream than others. But to the chagrin and regret of many senior managers and business owners after the war, as every aspect of their collaboration was investigated.

In our current wave of anti-capitalism, every failure, every error, every wrong step is used to demonstrate the failure of free enterprise to deliver, to support, to do good things. Yet, one of the magnificent successes of free enterprise just now is how it has risen to the challenges of the Covid-19 virus. Whatever has been asked, private enterprise has delivered, exceeding targets in volumes, delivery times, and price. The state has failed over and over; but capitalism has made up for that again and again. But do the owners, executives and managers of these fantastic businesses proclaim the merit of their many successes? Why do they not trumpet the benefits of the capitalist system that enable them to rise to the endless challenges we face? Let’s hear it for new forms of power generation, for our ability to feed more and more people at lower and lower costs, for new, faster, cheaper and efficient ways to build houses. Add your own list of all those things which have so much benefited the world. Of course, no system is perfect and, in particular, anything that starts to approach monopolistic tendencies, whether public or private, is not likely to act for the public good for very long. That was clearly understood by a past generation of politicians; the Thatcher government and the Reagan administrations both beefed up protections against misuse of market domination.

Now though we in Britain have moved a long way from a government which morally, intellectually, and practically promotes free enterprise and private businesses. Politicians cringe at being associated with free enterprise; every financial scandal is used to beat the government to the floor. Tory ministers have a terrible habit of not defending free enterprise but on retirement quietly taking the board seats and the fees – yes, Mr Cameron, well might you blush. And yet the defence is easy. So many young people are starting their own businesses and wanting to be their own financial masters; others still queue up to join major City corporations and care not a jot about the working hours (probably shorter than their fellows starting up their own enterprises). They are all engaged in free enterprise: they are all, to a greater or lesser degree, capitalists. Any politician who thinks that free enterprise is just as important as free speech should be making robust speeches and writing ringing endorsements of the system now.

So should the entrepreneurs and the capitalists. Yet so many free-market firms do so little to defend the system that enables their existence. Indeed, many nervously go along with the endless criticism and the gradual imposition of behaviours that are nothing to do with a free society, but all to do with the erosion of its value and its eventual destruction. Socialism, having failed after World War Two to gain access to control via the front door, is now creeping through the back door.

Growing a successful business in free democracies is not easy. Often the business world is competitive to the extreme. Our rapidly changing times bring fresh challenges only too often. Immense corporations impose unfair terms and control semi-closed markets. Taxation is high and the legislative environment hostile. But if business does not make a better case for free markets, it will see things get worse. Time for a protest march: “Freedom for free markets!”.

*Apologies to Andrew Marvell