Thank you, Stephen, for your kind introduction, and to the BSA for inviting me to speak at your conference again this year.

I’d like to congratulate the BSA on its 150^th birthday.

After my first year, I was pleased to be invited back, but after my speech last year, I was surprised you did invite me back!

Clearly, you aren’t afraid of controversial subjects, so I have chosen another provocative subject today: Leadership in an age of populism.

Today, I’m going to argue that there are echoes of some of the challenges we face in wider society within our own organisations. Namely, we know that people can feel constrained and disempowered by ‘the system’, processes and rules, which they don’t see as in their own interests.

As business leaders, and significant employers, I believe we have an opportunity to do something about this within our own organisations. And today I’d like to share with you what we are doing at Nationwide to shape our systems and create an environment of what we call ‘accountable freedom’ – a place where people feel empowered by the system, not controlled by it.

And I want to start by asking you a question – one that I’ve been asking a lot of different people.

So here goes. Let’s have a show of hands. Would you rather have been 14 when you were 14, or would

you rather be 14 now?

To be clear, this isn’t an opportunity to have your life again or do things differently. Simply, whether you would choose to be 14 when you were 14 or 14 now?

And I’d like to just stop and reflect on what those votes are telling us.

They are telling us that despite everything that is fabulous today – all the conveniences of modern life and communications, the everyday luxuries within our reach – most people would still rather have been 14 when they were 14 than now. And by the way, when I ask people why, they often say social media.

And perhaps the most astonishing thing about the answer to that question, is that it’s different from any previous generation. My parents grew up in the era of post-war austerity. Like pretty much every previous generation they would have said, I’d rather be 14 now: look at the opportunities, life is so much better.

If we think things were better than when we were 14, how do we expect 14-year olds today to feel? People have long worried about inequality within and between nations. But perhaps what should concern us most today is the inequality across generations.

Especially when you compare the factual evidence with people’s emotional responses.

I’m only as third as old as the BSA, which means I was 14 in 1984. We are wealthier in aggregate and
healthier than in 1984.

Britain is the fifth largest economy in the world. Real incomes have grown in 26 out of the last 30 years.

In that time, we’ve almost eradicated several diseases that used to kill and maim, like polio. An estimated 100 million children’s lives have been saved thanks to control of infectious diseases.

So, if empirically, we are healthier and wealthier than in 1984, why do 7 out of 10 Britons feel life is unfair, and two thirds think the country is on the wrong track? Why do so many people look back on the past as a golden era, but only see clouds on the future horizon?

I think it may be because people feel powerless against a system they feel is stacked against them. People can tolerate the idea of wealth inequality, and that some people get a better deal than others – as long as they can look to the future with optimism and confidence and see that they have the opportunity in their life to succeed as well.

Young people compare their parents’ lives – the free university education, buying homes in their 20s, jobs for life and gold-plated pensions with their own student debt, expensive rentals and unstable jobs. Who can blame them for thinking ‘you lot have had all the good stuff while my options look pretty limited’. And that’s before we mention climate change.

And at the same time, they see those with power exercising it – but without responsibility. And this is not a feeling that is confined to young people.

Many ordinary people whose living standards have stagnated over the last decade no longer trust in the system. It’s given rise to the sense of ‘them and us’ we see around us today. Put simply, most people don’t trust those in power to look after the interests of ordinary people. And I’m afraid it’s not just politicians who are distrusted, but business people and the media.

People’s dissatisfaction with the system has found its voice in the rise of populism, not just in Britain but right across the world. An estimated one in four Europeans voted for populist parties at their last election.

Of course, populism is a long way from being a coherent ideology but there is a common thread running through populist sentiment, which is the feeling that ‘the system isn’t working for me’.

The result is that populists across the political spectrum – from the Five Star Movement, to Podemos, to the gilets jaunes and others – all share a common belief in overthrowing the current system. Building societies are large employers – collectively we employ over 40,000 people – and so we are part of that system. We cannot solve all of society’s ills, but nor are we powerless. The question for us as leaders is how should we respond to the feeling of disempowerment that has become prevalent today?

This is one of the major leadership challenges that we’ve been trying to address at Nationwide and I’d like to share with you some of our thinking and the things we’ve been doing to make our own systems work better for our people.

And the phrase we use to describe what we’re trying to achieve is ‘accountable freedom’.

When I arrived at Nationwide, I was lucky enough to find a culture of trust, respect and collegiality, but also one where people and innovation could be checked by hierarchies and processes, with small decisions escalated to a very senior level.

Of course, we’re not unique in this. When I worked at Proctor & Gamble very many years ago, it took seven layers of management sign-off to decide to change the font on a bottle of Lenor.

We know that people perform at their best when they have a clear purpose, and feel trusted to contribute, and have the space and encouragement to do so. So, we knew that we needed to shape the system to free our people to be able to contribute at their best.

That’s what accountable freedom aims to achieve. It’s about giving people ‘permission’ to do things differently, to make decisions that are guided by our principles and values, in pursuit of our purpose. It’s emphatically not a ‘get out of jail free’ card, or a licence to disregard the important controls and processes that underpin our industry and keep our members’ money safe.

It’s a little like being the conductor of an orchestra, as described by the conductor Itay Talgam. He says that when an orchestra plays a symphony, if an individual musician alters the notes unilaterally, the result would be chaos.

The musicians need to work within the ‘system’ of the musical score, much as we need to work within the ‘system’ of our regulatory rules and our internal processes. But provided you stick to the score, there is flexibility in the interpretation.

That’s where we, as leaders, have choices. Do we want to be the type of conductor who treats their players like instruments, controlling each of them tightly?

Or do we want to be the type that treats their players as musicians and allows them to interpret the music within its structure?

Or, do we want to be the type of conductor who treats their orchestra as human beings, trusting them to work within the ‘system’ – the score – while bringing their whole human capability to playing the best music they can?

In organisations, as in orchestras, it’s about creating a culture of empowerment within the safety of a strong system.

So, let me give you some practical examples of accountable freedom in action across Nationwide. First, is our Leading for Mutual Good programme. I talked about this at your conference two years ago, when we’d just launched the programme. Now in its third year, over 1,100 people have been through it. It’s an intense course that brings together a broad cross-section of employees and we’ve had guests attend from the NHS, John Lewis, the RAF and the police. We also involve speakers from highly varied callings including an orchestra conductor, a philosopher and a psychologist.

The second way we’re embedding accountable freedom is through our People’s Choice initiative. We know that leaders in any organisation are not only the people at the top. One of the salutary lessons I learnt early in my career when working for large multinationals, was to realise how few people on the front line even knew the name of their CEO. Or worse, the apocryphal story of the employee who says: “I want to work for the company the CEO talks about.”

For many people, senior leaders can be too distant to be really influential – or removed from the heartbeat of the organisation. The leadership that affects them most is that which they experience directly – from team managers, or departmental leaders. So, we’ve broadened our definition of leaders and focused on promoting behaviours and attitudes that empower people at every level of our organisation, by introducing People’s Choice leaders.

These are people from across the Society who have already been recognised for embodying our values and decide to put themselves up for election by their 18,000 colleagues. Each year, 20 winners join our Leadership 200 team for a year and are treated exactly the same as everyone else in the cohort. They join our Leading for Mutual Good programme, build relationships, share perspectives with other leaders of the Society and even present to our main Board.

A third example is we’ve introduced a competition called the Arthur Webb Challenge Cup.

Arthur Webb was a pioneering figure in our history, who championed innovation and led the Society during two World Wars and served the Society for an impressive 59 years. He also sported the most incredible, luxuriant moustache, which has become the symbol for this challenge.

The humour – and I admit, some call it humiliation! – is humanising and this creates the space for people to speak up and have a go. It gives them the freedom to follow their own ideas on how we can improve, while working within our ‘system’. And this year over 700 people have taken part.

Last year, we asked colleagues to focus on efficiency. In just six months one team alone had delivered an efficiency benefit of £1 million to the Society.

This year, we asked teams to rise to the challenge of our fast-changing world, and entries include a team producing our first sustainability report, and another raising awareness of careers in tech for school children.

Another example of accountable freedom in action is how we’ve given people in our call centres the freedom to depart from their scripts and have ‘real’ conversations with members. In just one year, both our service and our employee engagement have improved.

So, we really believe that accountable freedom can be empowering. We still make sure the systems and controls are in place and adhered to, but we also make space for people to contribute with their whole human potential.

Of course, it doesn’t go right all the time and there are a few things we continue to find hard.

Our profits were down, as we expected given the major investment we’re making in technology and the long-term health of our Society.

But we made significant progress on things that matter to a building society. Record mortgage lending, growth in deposit balances, more than 20 per cent current account switchers, membership at a new high. More importantly, our year-end customer service and trust, as you can see behind me, were the highest ever.

And if you look at our employee engagement, which is 79% and over 20 points ahead of the financial sector average, what we are finding is that where we’ve invested time and effort in accountable freedom, our engagement has improved from an already high place.

So, there are signs that we are making good progress, but I would emphasise that this remains work in progress, and there is still much more to do to embed accountable freedom right across our organisation.

So why did I talk to you about this today? Well, as a movement guided by a social purpose, we’ve always focused on how we contribute to communities – and we talk a lot about our role in helping people save and buy homes and build better lives for themselves.

But as employers, we can contribute in other ways too.

If we’re living in a world where people feel they are working for the system, but the system isn’t working for them, then we have a responsibility to show that it’s possible to create a fulfilling, satisfying workplace, one where the system provides the guardrails, but the culture allows people to contribute to their full potential.

This is our responsibility as leaders the public and employees expect it of us. According to the Edelman Trust Barometer, more than three-quarters of the public want CEOs to lead change and a similar number of workers expect personal empowerment from their employer.

We may not be able to change everything that’s wrong in the world today, but we can show that it’s possible to shape the system so that it empowers people, giving us agency over our lives and optimism for the future.

Or to put it another way, how can we “be the change that we wish to see in the world”?