THE MAGIC KINGDOM

I've just returned from a family holiday in Florida and our first exposure to the whole "Disney experience". We stayed at one of the Disney hotels and spent most of our days at one of the theme parks , and although my personal favourite was a park that Disney doesn't own ( Universal Studios) I was really blown away by the customer service excellence that prevails right across this amazing business. The courtesy, humour, and pride in their business shown by every Disney employee we met really added extra zest to our holiday. Critics may question the sincerity of the service - offering, but I never found it fake at all. On the contrary it made me reflect on how crucial it is for our customers to believe WE trust and believe in our building society, before we ask them to do likewise. A culture of service excellence is still elusive in many UK businesses and thats one reason why building societies have a fantastic opportunity to outshine competitor banks. I wont be asking my branch teams to wear Goofy hats but they'll get plenty encouragement to give every customer a warm welcome, a smiling face and a genuine interest in how we can help them.

THE ART OF ENGAGEMENT

Earlier this week it was my privilege to collect The Hanleys award from Britains Best Companies , an accreditation for our overall comitment to staff engagement in our business. This is our 2nd consecutive year of being given a First Class rating and we are very proud to be amongst this elite.
However the customary photo-opportunity was not set up in the usual venue of a London hotel but was instead held at a special day of experiencing The Art of Engagement at a purpose-built centre in Milton Keynes where myself and 3 colleagues were able to participate in a series of development exercises on the 8 factors of workplace engagement; Leadership, Fair Deal, My Manager, My Company, My Team, Wellbeing, Persoanl Growth, and Giving Something Back. The huge warehouse space was split into zones and each had a focus on the very best practices associated with these key topics.
It was a refreshing start to the working week, and a slightly surreal experience. More crucially for me , the chance to be around other business people from different sectors of the economy is always an opportunity to re-establish my perspective on how The Hanley is doing.Too often we get a bit insular and compare ourselves to other building societies or other financial services firms. We should work hard to bear comparison with great customer-service providers in other markets, as that is how we really want to be judged.
The Art of Engagement declares that " Success is determined by the strength of relationships within your organisation. Quality conversations create quality relationships,and great relationships drive effective organisations that deliver results". Sounds very compelling to me.

FUNDING CHALLENGE

I was stunned to read in the weekend press that the BBC is taking 125 staff to cover the World Cup in South Africa in June. This is 5 times the number in Fabio Capello's squad and they're actually trying to win the tournament not just film it! Now I realise the BBC is not reknowned for being frugal but surely even by it's own standards of ostentation this is over the top. The BBC has a source of funding (the licence fee) which is a throwback to the early days of TV where a distinctive public-service channel was pioneering , but in a 21st century media where customer choice prevails it is bizarre that a tax (the licence fee) is paid automatically to the BBC while other channels must seek competitive sources of funding.(eg. subscriptions or advertising revenue).
Having read the article I started to think about sources of funding in our business and our reliance on savers.We see this as a real strength because it means that we fund our mortgages solely from money we attract from savers rather than money we borrow on the wholesale market.This enables us to plan better and to minimise our exposure to external risks. However the way that savers do business with us as a building society hasn't changed in decades. Passbook accounts and fixed term bonds remain very popular because they are simple and tangible, but I can't help but admit that some aspects of our savings offering merit updating. I am not contemplating current accounts or ATM- based banking as that's not where we choose to do business but I do believe that a 21st century mutual has to be alert to the needs and behaviours of emerging markets in our core areas of savings and mortgages. It seems to me that for instance a first time buyer loan linked to a web-based savings plan is a progressive way to attract retail funding in an era of customer choice,but we would want to retain the beneficial characteristics of our passbook acounts,namely simplicity and transparency. Watch this space!

BANKING BANANA SKINS

I was intrigued to read a recent survey by the Centre for the Study of Financial Innovation that "political interference" is regarded by bankers as the No 1 risk facing banking worldwide.The report describes the risk outlook for the banking industry in 2010, and samples the opinions of 400 bankers and regulators across 49 countries. The prevailing view is that whilst government efforts to rescue banks from the financial crisis may have staved off systemic collapse, the industry is now deeply politicised and this "banana skin" is seen as more risky than others such as credit risk, liquidity, and capital strength. As a risk "political interference" has several angles, including the distortion of commercial judgement,the creation of moral hazard, and uncertainty about how financial support will be removed.
Clearly the key factor shaping perceptions is the state of the global economy and most macro-economic trends were viewed pessimistically, with recent signs of recovery regarded as fragile and vulnerable to after-shocks. But implicit within the surveys No 1 banana skin is a fear of regulatory over-reaction ,which could impede an already tentative recovery.However to be fair to the regulatory authorities only 9% of respondents felt that the industry was "well prepared" to handle the risks identified and 11% thought the finance sector was "poorly" prepared to do so. My own No1 banana skin would be the pace of recovery and the absence of any momentum toward a post-recession strategy.In short, a governmental reality-check would be welcome. All businesses, not just in the financial sector, are wrestling with the new recipes for success in an emerging, post-credit crunch environment. What is clear to me is that reinvigourating the financial services sector needs to start with rebuilding the trust of customers and I take great heart from the fact that building societies have retained some powerful credentials to excel in doing just that.

MIDLANDS EXCELLENCE AWARD WINNERS

For the last 4 years our teams at The Hanley have strived to adhere to an "Excellence" model as defined by EFQM, which is a European benchmark for outstanding business performance. This means that in all we do our aim is to achieve standards of "Excellence" through best-practice and continually sharpening how we develop our people, processes and service to customers. We think that Excellence should be in the DNA of The Hanley, because that's what will differentiate us from competitors and help us carve a niche in the over-crowded financial services marketplace.
Some weeks ago we learnt that we were nominated for an award at the prestigious Midlands Excellence annual awards ceremony held at the ICC in Birmingham and attended by over 1200 people from businesses across East and West Midlands, from both private and public sector. Firms such as Carillion, Semens and ESOS were also amongst the nominees and The Hanley was the only building society in the running for an award.
I'm absolutely delighted to say that we attended the event last night and WE WON !!
Our "Excellence" credentials were deemed to have out-shone the others and we are now the proud holders of the Midlands Excellence Award for 2009/10. I am thrilled for all the staff at The Hanley.Their commitment to the society is unrelenting .For all of us it is a privilege to receive such recognition , particularly given the calibre of the other businesses nominated for the award.

Like many building societies, The Hanley has worked hard in recent years to demonstrate true member-engagement using various initiatives to keep in touch with our members and to invite dialogue. Our website,our member newsletters and our quarterly Customer Forums with myself and board colleagues have proven very valuable in ensuring that we are steering the business on a course which members can understand and support. Again this year we were proud to achieve 24% of members voting on our AGM resolutions as this level of voting will be amongst the very highest in the building society sector. These voting members gave the board outstanding backing with 97% in support of our annual report& accounts for our financial year 08/09,96% in support of the re-election of directors and 91% in favour of our remunerations policy. We are extremely grateful to our members for their unstinting loyalty and support, which we never take for granted and we know we must continue to earn in such difficult recessionary times. May I take this opportunity to wish all our members a very happy Christmas and a healthy and fulfilling 2010.

BSA ANNUAL LUNCH

Last week I attended the annual lunch hosted by the Building Societies Association (BSA) in London, along with Chief Execs from about 20 other building societies and representatives from regulators, government departments and business partners. The lunch itself was punctuated by a very strong and thought-provoking speeech given by Graham Beale, Chairman of the BSA, whose day job is Chief Exec of Nationwide. Graham spotlighted the resilience of building societies in the face of the current economic storm and our ability to just get on with doing what we always do, despite unfair and heavily-subsidised competition from those banks which are part or wholly owned by the government following their financial collapse last year. I know that Hanley members are bemused by the savings rates being offered by the likes of Northern Rock and Natwest banks as I have first hand experience of trying to explain how our own self-sufficiency makes it impossible to match those deals! Graham also focused on the future threat to the building sector as a whole if FSA proposals to reclassify certain external capital products (known as PIBS) come to fruition. All in all a very earnest mood was in the air. However I found my own enjoyment of the lunch was enhanced greatly by the fact that I sat next to Loretta Minghella , Chief Exec of the FSCS. As well as being a very interesting professional with a legal background and a sound grasp of the challenges facing small building societies like The Hanley, Loretta is also the sister of the late Anthony Minghella,one of Britains finest ever Film Directors with a body of work that includes Cold Mountain, The English Patient and The Talented Mr Ripley. Anthony died aged only 54 in March 2008 . I was completely captivated by Loretta's stories about her brother and her candour and warmth put some of our business challenges into very clear perspective for me.