BOSS OF THE WEEK: DAVID ANDERSON
AS David Anderson talks in the executive suite on the 24th and top storey of the Co-operative Insurance Society (CIS) Insurance Tower in central Manchester, it is impossible to ignore the steeplejacks working outside the window.
Suspended about 300 feet above Dantzic Street, the pair of construction workers are fixing solar panels to the building’s service tower in what has become the largest vertical arrangement of solar panels in Europe.
Anderson — whose career has spanned banking, leisure, manufacturing, management consultancy and civil service sectors — has been chief executive of the ethically-focused Co-operative Financial Services (CFS) group for the past 11 months.
He says the solar energy scheme on the exterior of the group’s head office “provides enough energy to power about 50 homes. While it won’t be enough to power this whole building, which houses more than 1,000 staff, it will be enough to make nine million cups of tea.
“They are photovoltaic cells, which means they work on daylight not sunlight and that is just as well around here.”
Anderson’s latest mission is to push the issue of climate change further up the corporate agenda; hence the steeplejacks. He expects payback from the £5.5 million project and a separate one to put wind turbines on the roof of another CFS building in Manchester to happen within “two to three years”.
Ethical banking may seem an oxymoron to some. But, since 1992, the Co-operative Bank has carved out a niche for itself in the UK market, becoming one of the few financial services firms to win new customers partly on the strength of its ethical approach to business. Its ethical policies which are mandated by regular ballots of all customers — mean that, for example, the bank will not do business with companies involved in the arms trade, genetic engineering, animal testing or those which use sweat shops.
CIS, the group’s insurance arm, came later to responsible investing, and has had to take a slightly less prescriptive approach. This is mainly because CIS does not want to be denied the opportunity to invest across the FTSE-100 index. So it follows a policy of “active engagement” — which means it makes sure it uses voting rights on all the shares it owns. Unusually for an institutional investor, its head of responsible shareholding, Ian Jones, frequently lambasts errant corporate boards of directors at their AGMs.
Last week, the approach won kudos when the Co-operative Bank came top out of more than 130 UK companies (up from third last time), in Business in the Community’s Corporate Responsibility Index 2005. CIS ranked 10th (up from 22nd in 2004).
In keeping with the bank’s green image, Anderson sometimes runs the 12 miles from his Cheshire home to CFS’s head office and otherwise drives it in a hybrid Lexus SUV. “It would be difficult for me to espouse our environmental position and drive a gas guzzler,” he says.
Looking back on his career, Anderson does not shy away from admitting that almost everywhere he has worked has laid off thousands of workers. At CFS — the holding company for the Co-operative Bank, CIS and internet bank Smile — 3,000 jobs were axed in the 18 months to last December, with staff numbers falling to 10,000.
A company spokesman says no further major job losses are envisaged. When Anderson ran Jobcentre Plus for the government, he oversaw the loss of around 8,000 jobs, with staff numbers shrinking to 72,000. Anderson admits: “The targets were very tough.” And at the British Leyland subsidiary Aveling Barford, where Anderson began his career in the early 1970s, staff numbers shrank from 2,000 to 700 during his three years there.
Anderson, who has also worked as chief executive of the Yorkshire Building Society, says that he was attracted to the CFS role “because it was back to financial services, and back to the part of the country where I grew up. Also, the opportunity here is enormous.” Following modernisation programmes, Anderson detects scope for increasing operational efficiencies at CFS, not least because its Co-operative Bank arm and CIS had been run as “silos”, or entirely separate businesses.
Anderson says he wants them to work more harmoniously together under the so-called “bancassurance” model. Essentially, this means persuading the group’s five million insurance customers to open bank accounts with the Co-operative Bank, and to sell more of CIS’s insurance policies and long-term savings products to customers of the bank. “It’s a mindset, reorganising this business around the customer rather than around insurance or banking,” says Anderson. He admits this has required “huge cultural change internally”.
To speed the process, Anderson has installed a new top management team which, for the first time, works right across the CFS group. He has also drafted in senior executives, including the former LEK management consultant, Craig Shannon, and former Abbey National senior executive Cathy Wilcher.
Before streamlining could take place, Anderson admits that CIS’s internal administration had to be overhauled, with paper-based systems replaced by computers. Anderson says integration work is still ongoing, but it seems the financial payback may have already started.
The insurance side of the business managed to boost its operating profits by 7 per cent in 2005, to £166.4m. In Scotland, Anderson believes that sponsoring the League Cup has been a major coup. “CIS’s business in Scotland really picked up when that sponsorship started.” The package – the cost of which Anderson declines to divulge – has just been extended to 2009.
On the banking side, the picture seems more mixed. Pre-tax profits in 2005 fell to £96.5m, down from £114.3m the previous year, partly on the back of consumer loans turning sour. But Anderson detects plenty of scope to grow the bank, whose total assets grew from £10.9bn in 2004 to £11.85bn at the end of 2005.
He says that the Co-operative Bank — which has 92 UK branches, including just one in Scotland — wants to extend its footprint to 215 locations. Longer-term, Anderson says he would like his group to become the UK’s “most admired financial services business” within 10 years. Anderson has laid down yardsticks by which he would like the business to be judged. These include customer and employee satisfaction, economic return (but not the maximisation of profit), “market leading social responsibility” and membership growth. “These give a flavour of what we can do to differentiate ourselves from the mainstream.
“We’re not just out to make money for shareholders, “ Anderson says. “We’re actually saying social goals are important to us. The campaigning role that we’ve had on fair trade, the environment, and increasingly global warming is leading people to join us for those reasons as well as for services levels and the value we offer.”
NEED TO KNOW
CAREER David Anderson, 50, was educated at Cheadle Hulme School, Oxford University and Harvard. He was Yorkshire Building Society chief executive for seven years, before two years as chief executive of Jobcentre Plus. He joined CFS as CEO last June.
FAVOURITE FILM: Gladiator.
FAVOURITE BOOK The Curious Incident of the Dog in the Night-time by Mark Haddon.
PASTIMES: running, sailing and football
FAMILY: Wife Fiona and two children, Tom, 23, and Penny, 21.
DRIVES: Lexus Hybrid
This article was published in the Sunday Herald on 14 May 2006