Wherever you look at present, the problem of inequality in society is being discussed. Lansons' Chief Executive Tony Langham explores why and how British business needs to engage...
Wherever you look at present, the problem of inequality in society is being discussed. President Obama has declared increasing inequality to be "the defining issue of our time". The theme dominated this year's World Economic Forum at Davos, with Oxfam claiming that half of global wealth will soon be owned by the 1%.
All British media outlets have recently produced programmes on the subject. Channel 4 Dispatches led with "How rich are you?" and "How the Rich Get Richer" (clip). BBC2 followed with "the Super-Rich and Us". Last week Radio 4 followed "The Price of Inequality" with "Clinging on : the decline of the middle classes". All of these programmes highlighted the (widening) gulf between rich and poor. All have reinforced the view that society is fundamentally unfair - and this is fast becoming accepted wisdom. As Robert Peston remarked "Inequality of opportunity seems to be a cause for concern for both those on the left and those on the right". The Economist recently wrote that "when discussing the chances of ordinary Americans rising to the top, politicians who agree about little else sound remarkably similar", whether Republican or Democrat. At a recent event in London, Joanne Milner, CEO of "the posh bible" Debretts, went as far as to claim that "the future of this country lies in social mobility and diversity".
All of which poses British business the question of what to do about it - and indeed whether to engage with such a difficult topic at all. For me, the case for engagement is fairly straightforward. We live in a country where we're suddenly constantly being told that society is unfair - and doesn't work for the majority of people, as Ed Miliband has maintained for several years. There clearly is a real problem but there is a danger it will be seen as inevitable and irreversible, at which point we may find that our very society is under threat. As hedge fund manager Nick Hanaeur told Jacques Peretti in "The Super-Rich and Us", "Show me a highly unequal society and I'll show you a revolution or a police state".
Those of us running businesses need to work to maintain our social contract. If we don't, the political response may help neither society or business. Politicians tend to find it easier to level down than level up, as President Hollande has shown. The tax (or capital) tax envisaged by Thomas Picketty in his now seminal "Capital in the Twenty-First Century", while at the time widely ridiculed is now a very real possibility in the next five years. But the real reason for business to engage with society's key issues is the simple one of citizenship. If it matters to the country and the workforce, business should engage. I believe that business can do more in three main areas : in the workplace, with customers and in the community.
Inequality in the workplace Fairness is becoming as big an issue within large organisations as it is within society. CEOs should be careful in assuming that their people will simply follow their lead. Employee trust in their leaders is at an all-time low. Executive pay is a good illustration of this: there's evidence to show that staff are often more negative about their own bosses' bonuses than the population at large. Major organisations need to be seen as meritocracies, with opportunity for all, if they are to retain cohesion and unity of purpose. And it's important not to replicate the problems of society. For instance, if one part of the organisation is staffed only by Oxbridge, Harvard and LSE graduate and there is no access from another part staffed from broader society, is that acceptable? Similarly with diversity, it is hard to deny that having a multitude of perspectives available is an asset to any business. Should a CEO be able to (credibly) say that everyone in the organisation could make it to CEO? Supporting diversity initiatives such as apprenticeships, thus, is crucial for many industries. Investing in apprenticeships is not just an investment in people, it's an investment in society and in the communities in which the business operates. Customers Business can actively work to tackle inequality with regard to customers, in particular where products and services are the most expensive to the poorest in society. The financial services industry has issues in this area. Payday lending, the most controversial sector of the lending field, has seen major state intervention. The availability of basic bank accounts (and the crucial pre-paid cards) also owe a lot to the Government and regulator. There is likely to be continuing pressure on the industry in mortgages (getting people on the housing ladder); bank overdrafts and credit cards (tackling cross-subsidies) and the asset management industry (entry level investments and charges) to name a few. Digital exclusion of the poorest and least technologically able from the best products is also a key area. Much good work has been done, but more is possible. Society The third key area is how business contributes to the community in general. Almost all major companies have significant community and CSR budgets, in addition to more commercial sponsorship and partnership programmes. Our client, the Co-operative Bank's customer consultation, ahead of the recent revision of its ethical policy, showed that people would like more of this spent helping the local community. A move to spend more on tackling inequality and improving social mobility would be pragmatic and popular for companies. By addressing the inequality agenda, British business can help society and itself. In "The Price of Inequality" Robert Peston suggests dark days ahead for capitalism only to be shouted down by investment sage Merryn Somerset Webb, who responds: "That's incredibly pessimistic Robert, we can make capitalism work". We can, but in a climate of increasing inequality, it will take positive action by British business.