Joe Garner speaking at the Greencoat Forum (Photo: Donna Noel)

by Pam Jenner

The business world is overshadowed by unsustainable activities and unethical behaviours and, in order to break the ‘vicious circle of mistrust’, there must be a change in the way people think. This was the message from Joe Garner, head of HSBC in the UK and deputy chief executive of HSBC Bank plc, when he spoke at a Greencoat Forum in the London centre of Initiatives of Change on 12 June. The title of his talk was 'Leading in a high risk environment: engaging hearts as well as minds'.

Garner took his audience back more than 70 years to the invasion of Hong Kong by the Imperial Japanese Forces in December 1941. Despite news of the invasion, HSBC's chief general manager, Vandaleur Grayburn, decided to remain in his post. When the allies surrendered Grayburn was interned by the Japanese but managed, at enormous personal risk, to set up lines to supply both money and essential supplies to those in prison camps. He assisted with the liquidation of the bank and smuggled telegrams out of the country to inform the world of what was happening. Eventually Grayburn's activities were discovered; he was sent to a prison camp and within a year had died.

(Photo: Donna Noel)Garner told the Greencoat Forum that Grayburn's decision to remain in his post was one of ‘great integrity’ and asked: ‘How have we got from a place where business was led with such integrity to an environment where business is overshadowed by so much distrust?’

The ‘visibly unsustainable activities’ and unethical behaviours of some businesses had created a perception that ‘business lacks integrity and is only acting out of self-interest,’ he said. This had led to a belief that consumers needed protection. To achieve that there had to be rules and regulations. This, in turn, had created a ‘massive pressure for change’. The politicians had blamed the banks for the financial crash; the media had also maintained a sustained campaign against the banking sector, while attacking the politicians over the scandal of MPs’ expenses. The politicians had attacked the media over the phone hacking scandal. Then the police made arrests over phone hacking and the media had attacked the police over their handling of last summer’s riots. The net result was a sustained erosion of trust.

‘If we want to make changes we have first to change our thinking,’ Garner said, adding, ‘I have yet to meet anyone who is trying to do the wrong thing so if wrong things keep happening it must be the way we are trying to decide what is right that is wrong.’

While there was an ‘absolute need for consumer protection’ and people needed to be protected from those who could not be trusted, there was, at the same time, ‘a darker side to compliance’. People were given the impression that if they followed the rules they were doing the right thing. Rules encouraged compliance and had the major advantage of being a shorthand for acceptable behaviour. But, he asked, ‘How effective are the rules? There are important downsides to rules. Rules alone are not enough. What about that central assumption that business lacks integrity?’ he asked, adding, ‘Our entire financial system is based on trust. When we put money in a bank we trust we will get it back. When we lend money we trust we will get it back.’

Fairness, as well as trust, was essential, he said. Another important value, not talked about enough and which underpinned successful performance, was customer care. When an organisation demonstrated care for its employees this was reflected in care for its customers and led in turn to sustainable growth. HSBC, he said, had continued to maintain healthy growth by looking after its customers.

The bank had recently restated its values, aiming to lead with ‘courageous integrity’ and had developed a training programme looking at the degree to which people were guided by principles, rules, policies and concern for others. It was clear, he said, that the really difficult problems people faced were in their personal lives and ‘if we can cope with things in our personal lives we can cope with anything that the business world throws at us.’

He did not believe the banking industry needed tougher regulation but better regulation and, while there was a need for rules, people should stand in front of them rather than hiding behind them. There was a requirement, he said, for a ‘super-vision’, an ability to see the bigger picture. If there was a cigarette paper of division among the top team then it became a chasm lower down, he said, adding, ‘When you point the finger at someone there are three pointing back at you.’

(Photo: Donna Noel)Responding to a question from a representative of the Occupy London movement about bonuses and excessively large salaries paid to top executives, Garner highlighted the link between greed and fear. 'The more you have, the more frightened you are of losing it,' he said. The banking industry was currently building a system in which it would be easier to switch banks and customers would begin to 'vote with their feet'. Responding to another member of Occupy London who said there needed to be a change in behaviours and culture, Garner said he was aiming to make a difference by initiating dialogue amongst people of very different viewpoints.

He asked his audience: ‘Are we living our values?’ and added that it was possible, with a change in attitude, to change the future: ‘We all do face a choice – to stand aside or to be led by those principles like hope, fairness, loyalty, kindness and trust. If we do we might be able to reverse this vicious cycle of mistrust and create a virtuous circle of trust, where businesses make principled decisions that in turn lead to loyal customers overseen by a wise regulatory framework. Does this require a leap of faith? Absolutely it does, because a leap of faith is the only way trust can be created.’

Garmer was introduced by Michael Smith, Head of Business Programmes at Initiatives of Change UK and thanked by Philippa Foster-Back, Director of the Institute of Business Ethics.